Ceylon Investment PLC - 2013/2014

Ceylon Investment PLC | Annual Report 2013/14 | 1

For the year ended/as at 31st March 2014 2013 Change (%)

Revenue 496,779 445,977 11

Profitfromoperations 457,551 472,042 (3)

Shareofprofitofequityaccountedinvesteesnetoftax 726,501 728,539 -

Profitbeforetaxation 1,182,416 1,200,571 (2)

Profitfortheyear 1,152,357 1,181,968 (3)

Totalothercomprehensiveexpensefortheyear (1,032,086) (101,844) 913

Totalcomprehensiveincomefortheyear 120,271 1,080,124 (89)

Netcashgeneratedfromoperatingactivities 16,037 492,886 (97)

Totalequity 8,425,372 8,723,789 (3)

Returnonordinaryshareholders'funds(%) 13.68 13.55 1

Earningspershare(Rs) 11.70 12.00 (3)

Dividendpershare(Rs)* 2.50 1.75 43

Netassetspershare-Bookvalue 85.52 88.55 (3)

Netassetspershare-Marketvalue 117.55 130.74 (10)

CeylonInvestmentPLC-Fundvalue** 11,865,565 12,855,629 (8)

Stock market data Allsharepriceindex 5,968 5,736 4

S&PSL20Index(points) 3,280 3,294 -

Marketcapitalisation(000') 7,339,358 7,881,190 (7)

Shareprice(Rs.)

Yearend 74.50 80.00 (7)

High 102.00 115.00 (11)

Low 73.10 58.10 26

*Basedonproposed/Interimdividends.

**Basedonfairvalueofportfolioafteradjustingforcashandcashequivalents

Financial HighlightsInRupeesthousands

2 Ceylon Investment PLC | Annual Report 2013/14

Chairman’s Statement

Chairman’s StatementIwelcomeyoutothe68thAnnualGeneralMeetingoftheCompanyandonbehalfoftheBoardofDirectorstakepleasureinpresentingtheAnnualReportandAuditedAccountsoftheCompanyfortheyearended31stMarch2014.

TheyearunderreviewhasbeenaquietonewiththeColombostockmarketrecordingmarginalpositivegrowthduringtheperiodunderreview.GlobalequitymarketshavebeenchallengedwiththeannouncementofthequantitativeeasingtaperingandtheuncertaintiestherebywereimpactingemergingmarketsliketheColomboBourse.Howeveronthedomesticfront,wesawanidealenvironmentbeingmappedforabuoyantequitymarketwithinterestratessteadilycomingdown,withtheCentralBanksettingthedirectionwithpolicyrates.Economicfundamentalsalsoimprovedsettingthefoundationforsolideconomicgrowth,withasteadyinterestandexchangerateregime.Howeverinvestorconfidenceremainedcautiousandwesawlocalparticipationatalow,preferringawaitandseeapproachandoptingforfixedincomeinstrumentssuchasdebenturesthatofferedattractivelowerriskreturns.Howeverforeignfundswerenetbuyersduringtheperiodofreviewandwereseencollectingfundamentalstocksatlowvaluations.WeatCeylonInvestmentbeinglongterminvestorsembracedthisopportunitytogrowtheportfoliobytransformingfromfullyvaluedtoundervaluedenterprises.Marketvolatilityduringtheyearunderreviewincreasedthuspresentingopportunitiesforbothbuyingandsellingofsecurities.TheColombobourseflaggedapositivereturnof4.06%fortheperiodMarch2013/14.

Despitethevolatileeffectsofbothlocalandoverseasmacrofactors,atCeylonInvestmentwestillremainconfidentofthelongtermpotentialofSriLankanequitiesandthesustainabilityoftheeconomicdevelopmentplanssetinplace.WebelievethatthelongtermdevelopmentpotentialofSriLankawillflowthroughtoits

equitymarketsandindicatorssuchasmarketcapitalisationtoGDP(currently29%)willimproveovertime.Forthistohappen,weneedagreaterdepthofcompaniestoinvestin,growthingoodqualitycorporateearningsandstrongforeigninflows.Needlesstosayseriousinvestorconfidencewillimprovewhenpolicymakersaswellascorporatestakeactiontodemonstratesustainablegrowthintheeconomyandbusinessenvironment.Atnationallevel,wereckonthiswouldenvisagestablemacro-economicindicatorsandconsistentpolicyframeworkgoverningprivatesectorinvestments.Atcorporatelevel,aggressivegrowthstrategies,investmentintoprofitableexpansionandgoodgovernanceandmanagementstructureswouldwarrantseriouslongterminvestorconsiderationandcommitment.

Weareencouragedbytherapiddevelopmentsincapitalmarketswiththeinfluxoflisteddebentureissueswhichwillhelpopenupanactivedebtmarket;aswellastheconceptofunittrustinvestinggainingpopularityandmomentum.Furthermore,theentryofnewinstitutionalprivateequityinvestorstotheunlistedmarketisanencouragingsignthatthisspacetoowouldimproveindisciplineandprofessionalismovertime.Werecognisetheeffortsthatpolicymakersandregulatorshavemadetospurcapitalmarketdevelopmentovertimeandhopethatfutureenactmentswouldfurtherstrengthenthestepsalreadytaken.

TheCompanyrecordedaprofitaftertaxofRs.1.2bndespitevolatileconditions.Amarginalupsideof4.06%wasrecordedforthebenchmarkAllSharePriceIndexandthemoreselectStandard&PoorSL20recordedanegative0.41%.OurportfoliovaluedecreasedtoRs.11.86bn,fromRs.12.86bnayearearlier;recordingadepreciationof7.70%vis-à-vistheindexgrowthgivenabove.Theactivelymanagedportfoliosgrew8.05%vis-à-visthemarketperformanceof4.06%ontheASPI.Ourperformancewasattributedtobookingofprofitsonselectedovervaluedstocks,capturingmarket

anomalyandbookingsubstantialcapitalgainsdespitesubduedmarketconditions.

Onevaluatingthemediumtermperformance,fiveyearcompoundedportfoliogrowthratewas31.1%p.a.onmarketvaluebasisand49.2%p.a.onmarketcapitalization,vis-à-visanAllShareIndexgrowthof29.5%p.aforthesameperiod.ThishighlightsthelongtermtrackrecordofCeylonInvestments.Thebuildupofcashbytheportfolioisnowevidentwiththeintentionofinvestingonlywhenfundamentalsjustifyacquisition.SizeablecashyieldsareturntotheinvestorsbywayofinterestincomeaddingtothetotalreturnofCeylonInvestment.

ThemanagementoftheactiveportfolioofthecompanyhasbeenentrustedtoGuardianFundManagementLimited,theassetmanagementcompanyoftheCarsonCumberbatchGroup.ItisregisteredwithandregulatedbytheSecuritiesandExchangeCommissionofSriLanka.Guardian’spositioningasafullyfledgedinvestmentcompanyintheSriLankanmarketsupportedbyitsowncapital,willbereinforcedwiththekeyfocusareasbeingidentifiedascustomisedinstitutionalportfoliomanagement,unittrustmanagementandprivateequitymanagement.Corecompetenciesineachareahavebeenstrengthenedthroughcoreteamswhohavechoseneachaspectofthebusinessastheirdesiredcareerpath.

Onthecountryperspective,visibleinfrastructuredevelopmentistakingplaceintermsofroadnetwork,portsandairports,whichhavebeenfundedbythepublicsector.Thisnodoubtwouldaddtoeconomicgrowthintheyearsahead.AlsomanystrategicprojectshavebeenapprovedbytheGovernmentshowingitscommitmentinattractingforeigndirectinvestmentsbyofferingmanyconcessionstoattracttheseinvestors.Thelargescaledevelopmentprojectswilladdtotheimpetusofthecountry’sgrowthgoingforward.WeremainexcitedaboutSriLanka’sgrowthprospects.Wewilllooktoembracethisopportunitybybuyingintoattractivelyvalued


companiesatopportunetimesexploitingthevagariesofthemarkets.Intheglobalcontext,SriLankaisnolongershieldedfrominternationalupheavalsandhencenewriskshavebeenaddedtothelocalinvestor.

ThecurrentchallengesfacedbySriLankaonitsinternationalstandingwillhavetobemanagedtoattractglobalcompaniestosetupoperationsandcommitdirectinvestments.Ontheaspectofregainingconfidence,thecountrycouldofferabetterbusinessfriendlyandtransparentenvironmentbypositivereinforcementofprivatesectorenterprise,aspeedyandefficientlegalprocessandessentiallygaininghigherrankingintermsoftheeaseofdoingbusiness.TheimportanceofsupportingforeignexchangeearningindustriescannotbeoveremphasisedgivenSriLanka’scurrentstateofdependenceonimportstofuelitsdrivetowardsgrowth.

Inconclusion,Iwouldliketothanktheshareholdersfortheconfidenceplacedinthemanagementovertheyearsandtotheregulatorsforsupportingourbusinesses.Iwouldalsoliketothankthemembersofourstafffortheiruntiringcontribution;theAuditCommittee,theRemunerationCommitteeandtheNominationCommitteefortheirguidanceandlastlymycolleaguesontheBoardfortheirvaluedinput.WebelievethatallourstakeholderswouldbenefitandbeapartoftheidentifiedgrowthpathoftheCompanyandurgetheinvestorstohaveconfidencegoingforward.

(Sgd.)Israel PaulrajChairman

25thJune2014Colombo


Managers’ Commentary

Economy in PerspectiveTheSriLankaneconomyrecordedaGDPgrowthof7.3%in2013,upfrom6.3%recordedinyear2012.GDPgrowthwasdrivenbytheindustryandservicesectors.Theeconomyreboundedinthesecondhalfoftheyearwiththeagriculturesectorcomingonstreamwithfavourableweatherconditions.Theindustriessectorwhichaccountsfor31%ofGDPcontributed9.9%toGDPgrowthduringtheyear.Theservicessector,whichaccountsfor58%contributed6.4%andagriculturesectorwhichaccountsfor11%contributed4.7%.

Thecountry’sGDPpercapitaatmarketpricesimprovedtoUS$3,280in2013fromUS$2,922in2012ontrackinachievingthelongtermgoalofUS$4,000percapitaby2016.TotalGrossDomesticProduct(GDP)ofthecountrynowisatUS$67bnatcurrentmarketprices.FortheyearJan–Dec2013,SriLankapostedaBalanceofTradedeficitofUS$7,609mn,areductionfromUS$9,417mnrecordedlastyear.Thecontractioninthetradeaccountwasduetothepickupinexportstogetherwiththecontinueddeclineinimports.Alsohighergrossearningsonaccountofexportofservicesandremittancesfromworkerscontributedtonarrowingtheexternalcurrentaccountdeficitsignificantlyduring2013.Theservicesaccount

-5

-1

3

7

11

15

Agriculture Industry Services GDP

4Q 0

9

3Q 0

9

2Q 0

9

1Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

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3Q 1

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4Q 1

3

%

GDP & Sector Growth Rates

-5

-1

3

7

11

15

1.5% 2.1%

4.2%

6.2% 7.1%8.6% 8.0%

7.9%8.2%

8.4% 8.3% 6.3%7.9%

6.4%4.8%

7.8%6.8%

6.0%6.3%

8.2%

(DFCC)raisedUS$1,350mnandfinancialinflowsintheformofforeignloanswerealsosignificanttotallingUS$2,900mnwhichresultedintheBOPrecordingasurplusofUS$985mn.Duringthesameperiod,grossofficialreservesbyendDecember2013amountedtoUS$7,495mn,whereastotalinternationalreserves(grossofficialreservesandforeignassetsofcommercialbanks)amountedtoUS$8,574mnequivalentto5.0monthsand5.7monthsofimportsrespectively.

Inflation,asmeasuredbytheCCPI,easedto4.7%onayearonyearbasisforDecember2013fromayeartodatehighof9.9%inFebruary2013.Apositivetrendisdemonstratedwithconsumerpriceinflation(year-on-year)beingatsingledigitlevelsforthefifthconsecutiveyear,continuingthedecliningtrendin2013.

Inlinewiththeeasingofmonetarypolicy,liquidityinthedomesticmoneymarketrosesignificantlyandremainedinexcessthroughout2013withexcessrupeeliquidityaveragingaroundRs.23bn.AlsoadditionalliquiditywasreleasedtothemarketwiththereductionofStatutoryReserveRatio(SRR)inJuly2013.

TheCentralBankreducedpolicyratesthroughout2013resultinginsignificantdeclinesintheoverallinterestratestructure.TheStandingDepositFacilityRateandStandingLendingFacilityRatewerereducedby1.0%and1.5%respectivelyto6.5%and8.0%withannouncementsinMay13,Oct13andJan14.TheStatutoryReserveRatiowasreducedby2.0%inJuly13toincreaseliquidityinthefinancialsystem.Thebenchmark364dayT-billand91dayT-billfellby340basispointsand246basispointsrespectivelyreactingaggressivelytopolicyratereductions.FixeddepositrateswhicharealsoanchoredtotheT-billratesfellsharplywithbankfixeddepositratesprovidingnetreturnssimilartoT-billafterdeductingwithholdingtaxtowardsthestartof2014.

continuedtorecordasurplusasaresultofbuoyancyintourism,transportandinformationservices.Fortheyear,earningsfromtourism(up35%yoy)andworkersremittances(up13%yoy)cushionedthecurrentaccountoftheBalanceofPayments.

Exportsfor2013grewby6.3%toreachUS$10.39bn.Rapidgrowthwasexperiencedtowardstheendof2013inapparelexportstoSriLanka’skeymarketsofUSAandEU.Importsdeclinedin2013by6%toUS$18.0bnonaccountofadeclineinintermediategoodsandinvestmentgoodsby8.9%and7.3%respectively.Theoveralltradedeficit

narrowedbyUS$1.8bnwhichisadeclineof19.2%comparedtothedeficitin2012.Thustheexternalcurrentaccountdeficitnarrowedto3.9%ofGDPin2013from6.7%inthepreviousyearasaresultofimprovedearningsfrommerchandiseexports,serviceexportsandworkerremittances.

Inflowsintheformofforeigndirectinvestment(FDI)amountedtoUS$1,421mnwiththeinfrastructureandmanufacturingsectorsattractingthehighestinflows.ForeigninvestmentsingovernmentsecuritiesviaissuancefromstateinstitutionssuchasNationalSavingsBank(NSB),BankofCeylon(BOC)andDevelopmentFinanceCorporationofCeylon


Dec Mar Jun Sept Dec Mar

12 13 13 13 13 14

TreasuryBill3M(%) 10.00 9.26 8.66 8.60 7.54 6.65

12M(%) 11.69 11.35 10.66 10.57 8.29 7.05

CallMoney(%) 9.85 9.49 8.55 8.43 7.73 6.94

PrimeLending(%) 14.40 13.77 12.09 11.94 9.88 8.57

Netcredittoprivatesectorhassloweddowntosingledigitlevelsof7.3%asatNovember2013comparedto31.6%inJuly13.Despitelowrates,sluggishlendingbybankshasalsoresultedinincreasingliquiditylevelsinthebankingsystemfurtherdepressingdepositrates.Theyieldcurvewhichhadaflat

0

5

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15

20

Inflation-CCPI Core

Year on Year 12 Month Moving Average

Mar

-10

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-09

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09

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%

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7

10

13

16

Money Market Rates

Standing DepositFacility Rate

Standing LendingFacility Rate

AWDR AWPR91 Days T-bill

Jan-

11

Mar

-11

May

-11

Jul-

11

Sep-

11

Nov

-11

Jan

-12

Mar

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%

structureatthestartof2013sawadeclineofapproximately340basispointsintheshortertenorsand225basispointsonthelonger5yeartenors.Thishasresultedinamorenormalisedupwardslopingcurveasatyearend.TheannouncementsoftaperingquantitativeeasingintheUSAmaybringaboutupwardpressurein

governmentsecurityyieldsdependingonhowforeigninvestorsreact.Thusfarthereactionofforeigngovernmentsecurityholdershasbeenmild.However,significantsellingofgovernmentsecuritiesbyforeignholdersandremittingsuchproceedsbacktotheirrespectivecountriescancausesharpmovementsininterestratesandtheexchangerate.

Additionally,acriticalfactortowatchintermsofmaintainingstrongeconomicfundamentalswouldbethesustainabilityofexportgrowthandtheabilitytocontrolthetradedeficit,ifimportsdopickup.Thiswouldhaveatrickledownimpactonthecurrencyaswellasinterestratesandinflation.SriLanka’sdebttoGDPrationowstandsat78.3%anddebtservicingcostswouldimpactthefiscalpositionsignificantlyifthecurrencyweretodepreciate.Thefiscaldeficitat5.9%ofGDPisvulnerabletobothrecurrentandcapitalexpenditureanddebtservicingcosts.

Ascapitalmarketparticipants,weareencouragedbythepositiveeffectthatcurrencystability,lowinterestratesandbenigninflationwouldhaveoncorporates.Apickupincreditgrowthwouldbeessentialtobringaboutthenextwaveofeconomicactivitybuttheresultingimpactoninterestratesandimportsneedtobewatched.

Webelievethattheeconomicfundamentalsareconducivetopositivecapitalmarketperformance.Thekeyindicatorsareimprovingandlikelytoaddtotheimpetusofthecountry'sgrowthmomentum.Howeverintheshorttermglobalshockscouldadverselyimpactusandchallengethestatusquo.Butinthelongtermwecountonalltheimportantindicatorstrendingpositivelytowardsgreaterinvestment,growthandstability.Policymakers’proactivestanceonsomeoftheseissuesisevidentwiththeCentralBankunveilingtheMasterPlanforconsolidationinthefinancialsector,withtheaimofbuildingastrong,dynamicandinternationallycompetitivefinancialsector.



Equity MarketsTheAllSharePriceIndex(ASPI)increasedmarginallyby4.78%forthecalendaryear2013.ForthefinancialyearApril2013toMarch2014theASPIincreasedby4.06%.Themarketwasbuoyantinthefirsthalfof2013whereitreachedahighof15%inMay2013.However,afterAugustthemarketweakenedsignificantlyonaccountofvolatilityinlargecapitalisedcounterssuchasJohnKeellsHoldingsandCeylonTobaccocausedbyforeigninvestorsreactingtointernationaldevelopmentsonQEtapering.However,tradingpickedupintheNewYearof2014withinvestorsrefocusingonequities.NetforeigninflowstotheColomboStockExchangeamountedtoRs.22.7bnandwerefocusedmostlyonbanks,conglomeratesandmultinationals.ThepositivemoodhoweverwasshortlivedwithmarketenthusiasmtaperingoffduringmonthsofFebruaryandMarchtoclosetheAllShareIndexat5968levels.During

SLRs.Per

unit as at 31/12/12

SLRs.Per

unit as at 31/12/13

SLRs.Per

unit as at 31/03/14

App./(Dep) for calendar

year2013

App. /(Dep.) for calendar

year 2014 to date

US$ 127.16 130.75 130.67 -2.75% 0.06%

STG 205.47 215.58 217.12 -4.69% -0.71%

Euro 168.13 180.45 179.50 -6.83% 0.53%

Yen 1.48 1.25 1.28 18.78% -2.4%

6

8

10

12

Treasury Yield Curve

26-Dec-12 27-Mar-13 28-Jun-13 25-Sep-13 31-Dec-13 31-Mar-14

%

3 M

onth

6 M

onth

1 Ye

ar

2 Ye

ar

3 Ye

ar

4 ye

ar

5 ye

ar

yearinthefirstmonth(Jan2014)recordinganappreciationof5.67%andmarginallyappreciating0.94%forthethreemonthperiod(JantoMarch2014).

Dailyaverageturnoverlevelsforthefirsthalfof2013wasahealthyRs.1.02bn,however,thesecondhalfoftheyearsawadeclinetoRs.646mnindicatinglowerparticipationinthelatterhalfoftheyear.AlsodailyaverageturnoverrangingfromRs.500mntoRs.1,000mnwasevidentinthefirstquarterof2014.

Takingintoaccountamorelongertermperspective,themarkethasgivenacompoundannualnegativegrowth(CAGR)of6.18%p.ainthelastthreeyearsandapositive29.51%p.atakingafiveyearperiod,demonstratingthatmarketcyclesandvolatilitydopersistforalongtime,andinthisinstancetheprolongedcorrectionmaybearesponsetotheexuberanthighsthatwererecordedafterthewarended.Howeverwhatisobservedisthatonlongcycles,equitymarketscontinuetoofferaboveaveragereturnsincomparisontofixedincomeyieldsandisabetterhedgeforinflation.

Muchofthemarketactivityhasbeenfromtheforeignside.AnetforeignoutflowofapproximatelyoverRs.6,848mnhasbeenrecordedintheNewYear(fortheperiodJantoMar2014).Thisisagainstatotalnetinflowof

theperiodofreview,markettradedbetweenalowofASPI5800indexlevelandhighofASPI6400indexlevel,givingatradingbandof600basispoints.Sincethen,aresurgenceofactivityhasbeenrecordedinthenewfinancial

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ASPI and S&P SL20 1 Year Movement

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x

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-0.4%


Rs.22.7bnrecordedin2013.ForeigninterestoractivitywasevidentoncounterssuchasCommercialBank,JohnKeellsHoldings,HattonNationalBank,AitkenSpence,CeylonTobaccoandChevronLubricants.Howevermixedsentimentwasevidentonthecounterswithbothsellingandbuyingfromforeignfundmanagers.Theoutflowinthecurrentcalendaryearisduetoflightofcapitalfromemergingmarketswithfundssellingoutduetoredemptionsandtransformingtodevelopedmarkets.Alsoforeigninvestorsinsuchfundshavebeenshiftingfromequitiestofixedincomeassetclassputtingpressureonovervaluedorfairlyvaluedmarkets.Ontheotherhandfrontiermarketshavebeenspared.Thepositivefactorwasonthedomesticparticipationincreasingwithbothinstitutionalandretailactivitybeingevident,posingahealthyoutlooktothemarketinthefuture.

31st Dec 12

31st Mar 13

31st Dec 13

31st Mar 14

Movement for 2013

Movement for 2014

to date

Movement for F/Y

2013/14

ASPI 5,643.0 5,735.6 5,912.7 5,968.3 4.7% 0.9% 4.1%

Avg.T/ORs.mn

649 909 641 594 -1.2% -7.3% -34.6%

MktCapRs.bn

2,167.5 2,205.0 2,459.9 2,498.0 13.4% 1.5% 13.2%

MktP/Eratio

15.9 15.5 15.9 15.9 -0.1% 0.1% 2.7%

1,000

2,000

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5,000

Value of Rs. 1,000 Invested in Equity vs. Fixed Income against Inflation - 5 Year

Fixed Income Equity Inflation

Rs.

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- 0

8

Dec

- 0

9

Dec

- 1

0

Dec

- 1

1

Dec

- 1

2

Dec

- 1

3

CAGR 31.5%Rs. 3,934

Rs. 1,710

Rs. 1,344

CAGR 11.3%

CAGR 6.1%

MarketcapitalisationoftheCSEremainedabovetheRs.2tnmarkatRs.2.48tn,withdomesticparticipationat63%andforeignparticipationat37%asatendMarch2014incomparisontodomesticmixof64%andforeignparticipation

at36%endMarch2013.Retailinterestwaslimitedduetolowinvestorconfidence.Howeverinstitutionalactivityhasbeenencouraging.Alsoduringtheperiodofreview,investorswereseenshiftingfundstolisteddebenturesatattractiveyields,raisingfundstothevalueofRs.68.2bnin2013.Demandbybothcorporateandretailinvestorcategorywasevidentduetotaxadvantageandinthebackdropofdeclininginterestratescenario.ThuscapitalraisingviatheIPOroutewasminimalwithlimitedpublicofferingsraisingRs.2bninvalue.RightsissuesraisedRs.25.6bnduringthecalendaryear2013incontrasttoRs.13.3bnraisedthroughin2012.Dividendyieldofthemarketincreasedto2.9%in2013from2.4%in2012.

TheCSEiscurrentlytradingata15.93timesPEratiobasedonlastyear’searnings,downfromaalltimehighof25timesrecordedinFeb2011.TheaveragePEbandwehavewitnessedattheColomboStockmarkethasbeen14timestakingalongcycle.Ona1yearforwardearnings2014/15themarketistradingat11.5timesand2yearforwardearnings2015/16themarketcomesdownto10.2times.HowevertheCSEremainsfairlyvaluedvis-àvisotherregionalmarkets.TheperformanceoftheSriLankanstockmarketinrelationtootherregionalpeershasbeenpoor.Thedevelopedmarketshavebeenshowingattractivegainsduetotheturnaroundoftheireconomies.TheUShasshownimprovementsintheireconomic

0% 20% 30% 50% 70% 90%10% 40% 60% 80% 100%

Turnover - Domestic vs Foreign

T/O -Domestic T/O-Foreign

63% 37%64% 36%66% 34%

69% 31%

68% 32%

74% 26%

62% 38%

59% 41%

68% 32%

58% 42%

77% 23%

68% 32%

64% 36%Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Des-13

Jan-14

Feb-14

Mar-14

5,132

3,869

4,878

1,514

1,061

2,237

1,404

3,160

-516

323

1,035

-5,075

-2,808

Net Foreign inflow (Rs. Mn)Rs.19,000 mn outflow (YE 2011), Rs. 38,681 mn Inflow (YE 2012), Rs. 22,733 mn Inflow (YE 2013)



indicatorssuchasunemployment,housingandconfidencelevels.AlsotheEurozonehasshownaturnaroundfromthebrinkofcollapseandmuchisexpectedintheyearahead.Takingacuefromthesefactors,marketsintheseregionshavedonespectacularlywell.ThusmarketsliketheColomboBoursehasunderperformed.Duringtheperiodofreview,themarketcaptoGDPdeclinedmarginallyto29%withthecountry’sGDPgrowingatafasterpacethanthemarketcapitalisation.

0

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Local Foreign Mkt Cap of Equity held by Foreign Investors (%)

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Rs. b

n.

Foreign Exposure to Equity Holdings at CSE

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35

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Daily T/O Avg Market PER

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International Market Performance 2014 (Jan-Mar)

MSCI Emerging IndexMSCI Frontier Index

VN Index - Ho Chi MinhThai Index

KLCI MalaysiaJKSE CompositeSSE Composite

NikkeiFTSE

Dow JonesASPI

Karachi IndexStraits Times

BSE SensexHang Seng

-0.8%5.4%

16.7%5.9%

-0.9%11.5%

-3.8%

-2.2%-0.7%0.9%

7.5%1.0%

-4.9%5.7%

-8.9%

%

-10 0 10 20 30 40 50 100

International Market Performance 2013

37%

36%

34%

31%

32%

26%

38%

41%

32%

42%

23%

32%

36%

MSCI Emerging IndexMSCI Frontier Index

VN Index - Ho Chi MinhThai Index

KLCI MalaysiaJKSE CompositeSSE Composite

NikkeiFTSE

Dow JonesASPI

Karachi IndexStraits Times

BSE SensexHang Seng

-4.9%21.3%

21.9%-6.7%

10.5%-0.9%-6.7%

14.4%26.5%

4.7%49.4%

0.01%

2.8%

8.9%

56.7%

%

Sector Mar-14 Mar-13 Performance

Bankfinance 13,288.16 13,227.3 0.5%

Bevfoodtobacco 19,273.09 16,057.6 20.0%

Chemicals 5,900.70 6,667.4 -11.5%

Construction 2,734.1 2,695.8 1.4%

Diversified 1,780.1 1,888.9 -5.8%

Footweartextile 728.8 780.4 -6.6%

Healthcare 820.9 581.6 41.1%

Hotelstravels 3,152.0 3,306.2 -4.7%

Investmenttrust 17,039.2 17,569.6 -3.0%

IT 81.0 80.1 1.2%

Landproperty 578.5 476.1 21.5%

Manufacturing 2,843.4 2,590.0 9.8%

Motors 14,898.2 14,584.6 2.2%

Oilpalms 96,882.1 97,201.2 -0.3%

Plantations 717.1 788.7 -9.1%

Power&energy 139.6 102.3 36.5%

Services 21,209.6 20,229.7 4.8%

Storessupplies 18,600.8 21,584.4 -13.8%

Telecom 175.0 169.7 3.1%

Trading 13,664.4 15,891.2 -14.0%

ASPI 4.1%


Comparative Price Earnings RatiosINDEX MARKET CURRENT YR 1 YR

FORWARD EST.

ASPI Colombo 12.39 10.82

Sensex Bombay 16.61 14.19

DowJonesIndustrials NewYork 14.84 13.60

FTSE100 London 13.34 12.29

HangSeng HongKong 10.25 9.43

JCIComposite Jakarta 15.20 12.92

Nikkei225 Tokyo 19.22 16.41

SSEComposite Shanghai 7.87 6.86

STTimes Singapore 14.32 12.96

BursaMalay Malaysia 16.33 14.91

Set Thailand 13.13 11.6

Karachi100 Pakistan 8.02 7.13

IBOV Brazil 10.17 9.00

IPSA Chile 15.32 13.22

RTSI$ Russia 5.07 5.00

MSCIFrontiermkts(MXFM) 11.93 10.57

MSCIEmergingIndex(MXEF) 10.35 9.35

Financial Review and Shareholder ReturnsCeylonInvestmentPLCreportedaprofitaftertaxofRs.1,152.3mnfortheyearended31stMarch2014,onarevenueofRs.496.8mn.Theprofitaftertaxrecordedadecreaseof3%andrevenuerecordedanincreaseof11%.AlsoanannualportfoliodepreciationofRs.990.1mnwasrecordedfortheperiodunderreview(2013depreciationofRs.841.7mn)

TheCompany’sEPSdecreasedtoRs.11.70fromRs.12.00,adecreaseof3%.ThevaluepershareoftheCompanyamountstoRs.117.55onamarketpricebasednetassetvaluation.HoweverthemarketpriceoftheCompanyistradingatadiscountof36.7%asat31stMarch2014.

TheCompanypaidaninterimdividendofRs.2.50pershare,animprovementonthedividendofRs.1.75paidin2012/13.TheCompanyhasbeenmaintainingaconsistentdividendpolicytomatchshareholderexpectationsdespitethevagariesofthestockmarket.ThedividendyieldoftheCompanyhasincreasedto3.36%,Shareholderwealthgainduringtheyearwas-3.75%.

Value of Rs. 1000/- Invested in CSE& Ceylon Investment

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Ceylon Investment CSE-ASPI

Rs. 8,950

Rs. 3,644

CAGR 46.5%

CAGR 29.5%

Rs.

NAV Per Share vs. Market Price - 5 Years Quarterly

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CICL Mkt Cap Growth vsAll Share Index Growth

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CAGR 29.5%


CashgeneratedfromoperationsamountedtoRs.16.0mnasatendMarch2014,thusstrengtheningthecashpositiontoRs.806.5mn.ThisisadecreaseofRs.155.5mnfromlastfinancialyearofRs.961.9mn.

Totalshareholderreturnfortheyear2013/14hasbeen-3.75%takingintoaccountbothsharepriceappreciationandcashdividendreceivedfortheyear.Takingamorelongtermhorizon,theshareholdersofCeylonInvestmentgotareturnof46.52%asdepictedintable'ShareholderReturns'givenabove.Incomparisontomarketbenchmarkperformanceyourinvestmenthasgrownabovethemarket

average.

Investment Performance and StrategyCeylonInvestmentportfolioissegmentedintodiscretionaryandnon-discretionarycomponentsbasedonabilitytoinfluencedecisionmakingonpurchasesanddisposals.Thediscretionarycomponentoftheportfolioisfurthermadeupofthetradingportfolioandlongtermportfolio


toreflectdifferentapproachestomanagement.ThetotalportfolioonmarketvaluebasisisvaluedatRs.11.86bnattheyearendfromRs.12.86bnasat31stMarch2013,adepreciationof7.70%againstthebenchmarkAllShareIndexappreciationof4.06%andStandard&PoorSL20Indexdepreciationof0.41%forthesameperiodThecompositeperformanceisdetailedbelow.

Ourinvestmentstrategyisbasedonafundamentalbottomupapproachtoinvestingwhichisverymuchresearchbased.Ourresearchmodelsplaceanintrinsicvalueoncompanieswetrackandourdecisionstobuy/sellwouldbebasedonwhethersharepriceisunder/overvaluedtothedeterminedintrinsicvalue.Ourdecisionsaredrivenbyaqualitativeevaluationoftheinvestee’sbusinessmodel,competitivepositioning,financialstrength,managementcapabilityandexpansionpossibilities.However,wheninvesting,wetend

As at 31st March 2014 2013 Change %

Discretionaryportfolio(‘000) 3,971,624 3,675,880 8.0

Totalportfolio(‘000) 11,865,565 12,855,629 (7.7)

Benchmark–ASPI(Points) 5,968.3 5,735.7 4.1

Shareholder Returns 31-3-2009 31-3-2010 31-3-2011 31-3-2012 31-3-2013 31-3-2014

ASPI 1,638 3,725 7,226 5,420 5,736 5,968ASPIgain -35.8% 127.4% 94.0% -25.0% 5.8% 4.1%Startoftheyear -Quantity 1,000 1,000 801 4,085 4,085 4,085 -MPS 78.00 58.00 271.00 151.00 78.30 80.00 -Wealth 78,000 58,000 217,071 616,835 319,856 326,800Dividend -DPS 7.00 6.70 1.00 1.25 1.75 2.50 -Value 7,000 42,978 801 5,106 7,149 10,213Endoftheyear -Quantity 1,000 801 4,085 4,085 4,085 4,085 -MPS 58.00 271.00 151.00 78.30 80.00 74.50 -Wealth 65,000 260,049 617,636 324,962 333,949 314,545AnnualShareholderwealthgain% -16.7% 348.4% 184.5% -47.3% 4.4% -3.75%Totalreturntoshareholders-5Y 46.52%

Profit to Shareholders vs Cashflows Generated (Rs.000')

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tolookatthemacrolevelpictureaswellastodeterminetheattractivenessoftheenvironmentwhenmakinginvestmentdecisions.Thisismoreasaguidetodeterminingtheenvironmentofinvestingthanforminganopiniononinvestmentfinds.Weregularlybalanceourexistingportfolioandtransformfromovervaluedtoundervaluedstocks.Similarly,wemakecallswhenwetotallygetoutofstockandremainincashuntilsuchtimeaswediscoverapotentialundervaluedcompanythatfitsourinvestmentprofile.

Ourportfoliocontinuestoleanheavilyonthediversifiedsector,whichisaproxyfortourism,bank&finance,food&beveragesandthepalmoilsectors.Thissectorcoversabroadspectrumofbusinessesfromwhichwegetindirectexposurebeinginthissector.WebuiltexposuretoAitkenSpencePLCbutwerelimitedinaccumulatingHemasHoldingbeforetheshareovershotourbuypricerange.WecontinuetoholdareducedexposuretoJohnKeellsHoldingsthemostliquidforeigndrivenstockontheCSE.Wealsoarebullishonthebanking&financesector,whichwebelievewillyieldgoodmediumtolongtermreturnswiththeannouncementofproposedconsolidationandresultingsynergies,thusholdinganover–weighttothesector,whichmainlyconstitutesSampathBank,NationsTrustBankandCommercialBankofCeylon.Themixofbanksinourportfoliorangesfromhigherriskbalancesheetstoconservativeones,andfromlargesizetomediumsizecommandingvaryingmarketshares.Allarecurrentlyundervaluedintermsofforecastvaluations.Weremainunderweighttobeverages,food&tobaccosectorwhichisthelargestsector

attheCSEduetoourportfolio’sstanceonthemultinationalcompaniesrepresentedinthesector,whichwereperceivedtobeovervalued.Theminimalexposureinthesectorhasnegativelyimpactedtheportfoliointheyearunderreview.Alsoourunderweightcontinuesonhealthcareandtelecommunicationsectors,duetosellingofourholdinginAsiriHospitals.Howeveronthereversal,weaccumulatedDialogouronlyexposuretothetelcosectoratgoodprices.Ourportfolioconcentrationonafewsectorssupportsourphilosophyofstockpickingandwearenotoverlyworriedofthemismatchesbetweenourselvesandtheindex.However,ourconvictionininvestinginwhatweknowintermsofindustrypotential,growth,riskfactorsandcompetitionwoulddeterminefutureselectionofpotentialstocks.

Company Market value(000')

% of total portfolio MV

CommercialBankofCeylonPlc 617,643 19.52

JohnKeellsHoldingsPlc 375,258 11.86

DialogAxiataPlc 292,766 9.25

SampathBankPlc 269,211 8.51

AitkenSpencePlc 213,814 6.76

Duringtheyearended31stMarch2014,CeylonInvestmentmadeRs.1,508.7mnofnewinvestmentsandRs.1,096.3mnofdivestments.Hence,CeylonInvestmenthasbeenanetbuyerinthemarket,wherebyacumulativecashpositionofRs.809.2bnwasbuiltinkeepingwithourstrategyofdivestingwheninvesteecompaniessharepricesgobeyondintrinsicprices.Tillsuchtimeofidentifyingundervaluedstockswewouldlooktoearninterestincomeonexcesscash.

Thetaskofidentifyinggoodinvestmentsatundervaluedpriceshasbeenachallengeintheyearunderreview.Ourresearchteamhaslookedatsomeinterestingcompanieswithuniquebusinessmodels,wherewehavemetwithmanagementandformedourviews.Ithasbeenaninterestingjourneyevaluatingprospectiveandcurrentinvesteecompaniesandmeetingwiththemanagementtobaseouropinions.Ourquantitativeresearchfindingshavebeenenhancedwiththequalitativefindingsoncorporategovernance,complianceandhumanresourcemanagement.Ourlearninghasbeenextensivefromexperiencesfromthecompanieswehaveinvestedinandwillcontinueourbestpracticeoflookingforthebestmatchthatfitourcriteria.

Ceylon Investment - Sector Allocation

6.8%29.5%

3.6%

4.4%

2.1%

12.4%

5.9%

9.3%6.3%

23.6%19.6%

0 10 20 30 40 50%

46.5%19.6%

Other

Hotels and Travels

Health Care

Unit Trust

Telecommunication

Banks, Finance and Insurance

Divesified Holdings

21.5%

ASPI S&P SL20

Ceylon Investment Asset Mix

0.02%

79.6%

20.3%

Listed equity

Fixed income

Private equity

Top 5 Holdings


Manager's Commentry

Profile of the Fund ManagersCeylonInvestmentfundsaremanagedbyGuardianFundManagementLtd(GFM),whichisafullyownedsubsidiaryoftheCompanyand

isregisteredwiththeSecuritiesandExchangeCommissionofSriLanka.ItmanagesthelargestlistedequityfundinSriLankaandhasbuiltupitscompetenciesinthefieldofportfolio

management,researchandsupportservices.TheCompanyhasextendeditsbusinessmodeltocaptureretailfundsbymanagingunittrustfundsviaajointventurepartnershipwithAcuityPartners(Private)Limited.Ourcompetenciesonfixedincome(FI)assetclassarebeingbuiltwiththeincreaseinassetsundermanagement(AUM)underthisassetclass.

Thefundmanagementcompanyisaprofessionaloutfitsetupwitheffectivecomplianceprocess,codeofethics&standardsofprofessionalconductforemployees.GuardianFundManagementhasexpandeditsoperationbyextendingitsfundmanagementcapabilitiestocompaniesoutsidethegroupfundsbuiltaportfolioofexternalclientbaseconsistingofprovidentfund,pensionfunds,corporateclientsandacountryfund.Toenablethemanagementofexternalclientfundsithasanindependentcomplianceofficertomonitorclientinterestandensureobjectivesarebeingmetwiththeriskprofileoftheclient.TheAUMunderthiscategoryhasgrowntoasizeableamount.

Our Future View Goingforward,theequitymarketisexpectedtoperformwellinthemediumtolongtermasSriLankadeliversonitsgrowthpotentialwhilealsobenefitingfromtherapiddevelopmentofcapitalmarkets.InvestorconcernswithregardtotheimpactoftheUSFederalReservetaperinganditsimpactonemergingmarketsmayresultinsignificantmarketandcurrencyvolatilitydependingonhowforeigninvestorsreact.Othershorterterminfluencessuchaselectionsandinternationaldevelopmentsmayresultinsignificantmarketvolatility.

Inourview,investorsentimentattheColombobourseshouldbecomebuoyantwithinterestratesatanalltimelow.Wefeelthatinvestorsshouldconvergetoequityassetclassmatchingriskreturnwithexpectedreturns.Thediscoveryofsuchopportunitymighttaketimebutasinstitutionalinvestorswebelievethatmuchopportunityawaitsontheequityfrontand

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GUAR - Discretionary ASPI S&P20

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CAGR 31.1%

CAGR 29.5%

CAGR 29.2%

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CAGR 30.4%

CAGR 29.5%

CAGR 29.2%

Inde

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Performance 1 Year 3 Year 5 Year

DiscretionaryPortfolio 8.0% -0.3% 31.1%

ASPI 4.1% -6.2% 29.5%

S&PSL20 -0.4% -5.5% 29.2%

Performance 1 Year 3 Year 5 Year

TotalPortfolio -7.7% -12.5% 30.4%

ASPI 4.1% -6.2% 29.5%

S&PSL20 -0.4% -5.5% 29.2%


wewouldnothesitatetobuildpositionsinidentifiedcompaniesatourpricetargets.Thelongtermsustainabilityofinterestratesislikelytohaveanimpactontransformingthemindsetofinvestors.Webelieveitwoulddosointhefuture.

Contrarytotheabove,inthecurrentyearwehaveseennetforeignsellingattheCSEduetoglobalpulloutoffundsfromemergingandfrontiermarketsimpactingtheColomboBourse.Thereforewearehopefulofseeingportfolioinvestmentsinthesecondhalfoftheyeartoselectheavyweightliquidcounters.Further,retailinterestislikelytobedrawntothesecondtierormidcapstocksthusinvigoratingtheColomboBourseacrosstheboard.Thusweforeseebothlocalandforeignbuyingtomaintainthestockmarketinthecomingyearandamomentumdrivenrallyislikelyinthenewfinancialyear.

Webelievethecatalysttomarketperformancewouldbetheunderlyingcorporateearningsofthecompanies.Unlesscorporateearningsdeliveronexpectedgrowththesustainabilityofthemarketwebelieveisshortlived.Weremainconfidentthatitcoulddosogivencountry'sGDPgrowthtargetsandlistedcompaniesbeingtheproxytothegrowthenvisaged.CorporatesalsowouldbenefitwiththelowinterestratescenariowhereprojectIRRwouldbeattainablegivenloweringofratesacrosstheboard.Thiswouldmakeleveragedcompaniessaveinterestcosts.

DespiteuncertaintiescloudingtheColomboBourse,weremainconfidentinthelongtermonthepotentialofequities.WeatCeylonInvestmentdobelievethatequitiesofferaboveaveragereturnsinlongcyclesandhencearenotafraidtocommitlongtermcapitaltogoodcompaniesatattractivepricelevels.Atpresent,theCSEistradingat14.4times,relativelyvaluedincomparisontootherAsianmarketsandfrontiermarkets.However,ona1yearforward

earnings,themarketisatPEratioof11.5timesand2yearforwardearningsataPEof10.2times.Hence,wefeelthatthemarketoffersvalueinthemediumterm.

Guardian Fund Management LimitedInvestmentManagers

Colombo25thJune2014


Risk Management

Riskmanagementisanintegralpartofourbusiness,particularlysincebalancingrisksagainstreturnsisacriticaltradeoffdecisionwehavetomakeeverydaywhenitcomestomakinginvestmentdecisions.Werecognisetheimportanceofriskmanagementandhavebuiltacomprehensiveriskmanagementstructurethatfocusesoncontinuousidentificationandmanagementofbusinessrisks.Wehaveinplaceseveralmeasurestostrengthenourriskmanagementprocesseswhicharelinkedtoourdailyinvestmentdecisions.Theseincludepoliciestomitigatebusinessrisksalongwiththeupgradingofthesupportsystemsthatenableeasymonitoringandmanagementofrisks.

WebelievethatriskmanagementisofparamountimportanceinsafeguardingtheinterestofallstakeholdersandhaveundertakenacomprehensivereviewtoenhancetheriskmitigatingprocessessetinplacebyGuardianFundManagementLimited,theinvestmentmanagersoftheCompany.

Weseeriskmanagementnotasanefforttoeliminaterisk,butasmanagingriskwithincertainrisktolerancelevelssetbytheCompany.Risksappropriateforaparticularportfoliowillbeassessedagainsttheriskpreferencesoftheinvestorandoverallportfoliostrategy.ThusdifferentportfolioswithinCeylonInvestmentwouldhavedifferingriskprofiles.

The Risk Management Structure in PlaceGuardianFundManagement(GFM)hasbeensetupasanindependentfundmanagementcompanyandthemanagementoftheportfoliosofCeylonInvestmenthasbeendelegatedtothiscompany.TheBoardofDirectorshasformulatedandapprovedaninvestmentframeworkandcontrollimitsforGFM’sfundmanagementoperation.GFM’smanagementteamisresponsiblefortherecommendationandexecutionofinvestmentdecisions,duringthe

courseofwhichoversightandmanagementofthebusiness,financialandoperationalrisksoftheCompanycomeintoplay.Acomprehensiveriskidentificationandmanagementframeworkisinplaceandismonitoredconsistently.

GFMhasbeenregisteredasanInvestmentManagerwiththeSecuritiesandExchangeCommissionofSriLankasince2006whileCeylonGuardianInvestmentTrustPLCanditssubsidiaryCeylonInvestmentPLChavebeenregisteredasunderwriterssince2009.GFMaswellastheCompanytherefore,comeunderthepurviewofthecapitalmarketregulatorandhenceinternalmonitoringisdoneonaquarterlybasistoensurethatthesetregulationsareadheredto.AuditsbytheSecuritiesandExchangeCommission(SEC)iscarriedoutasrequired.Furthermore,asalistedcompanyCeylonInvestmentPLCconformtothelistingrulesandguidelinesoftheColomboStockExchange.

TheBoardofDirectorsoftheaboveCompanyhaveultimateresponsibilityforriskmanagement.HencetheBoardissupportedbyanorganisationstructurethatcoverstheentireriskmanagementframeworkthroughanindependentComplianceOfficerdrawnfromgrouplevelaswellastheinternalauditfunctionoftheCarsonCumberbatchGrouptowhichtheCeylonInvestmentCompanybelongs.TheAuditCommitteeoftheCompanyhasoversightoverthefinancialreportingfunctionoftheCompany,thesystemofinternalcontrolsaswellastheaudit,complianceandriskmanagementprocesses.Further,anInvestmentCommitteedrawnfromacrosstheCarsonsGroupdirectorateprovideadviceandinsightstothefundmanagementteamtofurthersharpenandrefinetheirdecisionmakingprocess.Thisorganisationstructuredeterminestheobjectivesandpoliciesofourriskmanagementframeworkandpromotesacultureofriskawarenessandbalancedrisk-takingwithintheCompany.

Risk CategoriesCeylonInvestmenthasidentifiedandcategoriseditsrisksintofourcategoriesmarked,namelymacroenvironmentalrisks,portfoliorisks,compliancerisksandoperationalrisks.

Givenbelowisitsapproachinmanagingthesekeyriskareas.

Macro Environmental RisksCountry RisksCountryriskisapplicableforinvestmentsmadeinasecurityissuedbyanentitysubjecttoforeignlawsoriftransactionsareenteredintoinmarketsinotherjurisdictions.Thesumsinvestedandprofitsorreturnsaccruingaresubjecttoexchangecontrolregulations,currencyfluctuations,transactioncosts&taxesandotheractionsthatmaybeimposedbythegovernmentorpolicymakingbodiesofthesaidcountries.Sincethecapitalaccounthasnowbeenliberalisedtotheextentofpermittingapprovedoverseasinvestmentsuptoacertainvaluebylistedcompanies,thisisanewriskareathatwearelookingtobuildaframeworkasCeylonInvestmentintendstoexploitnewmarketsinthefuture.

Currency RiskWhereinvestmentsaredenominatedincurrenciesotherthanourprimaryreferencecurrencywhichistheSriLankaRupee,andwheretheCompanyisrequiredtoconvertfundsfromonecurrencytoanotheruponmakinginvestments,aswellasinreceivingthereturnsfromthoseinvestments,theCompanyisexposedtotheriskoftheforeignexchangeparitiesmovingagainstone’sinvestment.

ThisriskisnotcurrentlyapplicabletotheCeylonInvestmentasthecurrentexposureoftheCompanytoinvestmentsdenominatedinforeigncurrenciesisnil.Lookingaheadwewouldaddresscurrencyrisksinourinvestmentsonaglobalcontext,whenweinvestoverseas


TheriskexposureexistswithmanagingtheSriLankaFundandportfoliosofforeigninvestors.Herewetakecaretoensurethatbenchmarkreturnsonsuchforeigncurrencydependentportfoliosaremetaftercurrencyconversionsareexecuted.Oureconomicresearchgivesusanunderstandingoftheexpectationsonfuturecurrencymovementsforbettermanagement.

Market Risk - DomesticThebroaddefinitionofmarketriskisexposuretoadversemovementsinthesecuritiesmarketsforbothequityandfixedincomeinvestments,whichcanresultinvaluelossaswellasvariationsintheanticipatedreturnsfromthosesecurities.Allfinancialinstitutionsfacemarketrisks,createdbychangesinthemacroenvironmentrelatedtopoliticalfactors,nationalsecurity,economicmanagementandglobalisationinfluenceswhichhaveanimpactonsystematicriskfactorssuchasinterestrates,currencyparity,inflation,andavailabilityofcredit.Therefore,understandingmarketrisksrequiresconsideringmultipledimensionsandcomplexityinthemacroenvironment.

Marketrisksareinherentineverysecurityandarethuscollectivelyconsideredattheportfolioleveltotakeintoaccounttheassetallocationdecisionsoftheportfolio.Thusmarketrisksaffectingaparticularclassofsecurityaremitigatedbyswitchingtoassetclassesthatareassessedtobelessriskyinaparticularscenario.

AllmarketparticipantssuchasCeylonInvestment,developtheirbusinessmodel,takingintoaccountexposurelimitsandparameterstosustainitselfwhenfacedwithmarketrisksthatcanaffectportfoliovalues.Themitigatingprocesshasbeentodevelopasoundresearchbasetodeterminechangingeconomicfundamentalsofthecountry,determinetheimpactonequityvsfixedincomeinvestmentsandthepromptshiftingoffundsbetweenassetclasses.Thisisofvitalimportanceintradingportfoliodecisionswherequickencashmentof

equitiesiscarriedoutifmacroindicatorsmoveadverselyleadingtoaslowdowninstockmarketactivity.

Theprocessofassessingmarketrisksoninvesteecompaniesalsoformsavitalpartofourresearchprocess,wheresensitivityofstockvaluationstochangesineconomicindicatorsarecontinuouslymonitored.

Market Risk - International and ExternalTheseriskscannotbediversifiedormitigatedbytheCompany.Thereisanindirectimpactofrisksofothermarketstoourdomesticmarketasclearlyseeninthepast.Intheglobalworldofcrossbordertradeandcrossborderinvestmentflows,theimpactofchangingeconomicindicatorsandpolicyishighforthedomesticeconomy,especiallyinacountrysuchasourswhichisimportdependentforvitalcommodities.

Henceindeterminingfundstrategywemonitorkeyeconomicindicatorssuchasinterestrates,exchangerates,inflation,budgetdeficits,aswellasglobalcommoditypricessinceSriLankaisanetimporterofessentialcommodities.Thisenablesthefundteamtogetafeelofchanginginternationalmarketdynamicsandinturnrelatethattolocaldevelopments.Theentryandexitofforeigninvestorinterestinthelocalmarketisalsodeterminedbythemacroeconomictrendsprevailinginforeignmarketsandrelativevaluationsofourmarketvis-à-visdevelopedandothercomparativeAsianmarkets.Informationtomonitorandinterpretglobaldevelopmentsincapitalmarketsisvitaltoassessandmitigatethisrisk.

Wewouldbuildexpertiseinforeignmarketsgoingforward,aswewouldlooktoinvestoverseasgradually.Inmitigatingtheriskwewouldtieuporcollaboratewithforeignentitiesthathaveexpertiseinsuchmarketsinordertogainknowledge

Portfolio RisksGeneral Securities RiskAnytradinginsecuritiescarriesinherentinvestmentrisksassociatedwiththeentityissuingthosesecurities.Inparticularthepriceorvalueofanysecuritycananddoesfluctuateandmayevenbecomevalueless,resultinginpossiblelossnotonlyofreturnsandprofits,butevenallorpartoftheprincipalsumsinvestedinthecaseofafixedincomeinstrument.Theserisksariseasaresultoftheoverallrisksfacedbytheissuingentitywhichaffectsitsabilitytoprovideareturntotheinvestorsholdingthesecuritiesissuedbyit.Particularlyinthecaseofequities,pastperformanceofanyinvestmentisnotnecessarilyindicativeoffutureperformance.Ourapproachfocusesonthefactthatthereisnosubstituteforfundamentalsecurityassessment.Ourportfoliomanagementandinvestmentselectionprocessisdesignedtomaximisetherisk/returntradeofftoourshareholdersandweemployabottomupinvestmentselectionprocess.

Ourriskmitigatingmethodologyisbasedonourinternalresearchprocessthathasaddedvalueovertimetoourchoiceofinvestments.Prospectiveinvestmentsareselectedfromfundamentalanalysisandcontactwithcorporatemanagementoftheissuingcompanythroughcompanyvisits.Onceaninvestmentismade,acontinuousprocessofmonitoringtheperformanceofthatinvestmentisadopted.

Wemanagetheconcentrationriskarisingfromoverexposuretoonesecuritybymonitoringsectorexposureandsinglecompanyexposureasmitigationstrategies.Further,equityexposurelimitsatcompanyandgrouplevelaremonitoredasanothermeasureofmanagingrisk.Losslimitsaresettomonitorstocksperformingbelowtheircostofacquisitiontodeterminewhethertemporarycapitalerosionisaconcern.Thishelpsusmitigatethedownsideriskofanysecurityintheportfolio.


Risk Management

Inthecaseofprivateequity,Boardrepresentationinproportiontotheinvestmentforstakesover10%isconsiderednecessarywhileforsmallerstakes,monitoringmechanismstofacilitateconstantevaluationoftheinvestmentarebuiltintotheshareholderagreements.

Liquidity RiskUndercertainmarketconditions,aninvestormayfinditdifficultorimpossibletoliquidateaposition.Thiscanoccurwhentradingissuspendedbytheexchangeonwhichasecurityislistedorwhenpoormarketsentimentdriesupinvestorinterestinasecurity.Inaddition,theremaynotbeareadymarketforcertaininvestmentsduetolowlevelsofpubliclytradedquantities.Someinvestmentswillhavetobeheldtomaturity.Properinformationfordeterminingthevalueofcertaininvestmentsmayalsonotbeavailableundersuchcircumstancesoflowliquidity.Howeverthestrategyofholdingbigstakesmightbealimitingfactorwhenselling,ifthestockisilliquidorinthecaseofachangeinfundamentals.

Wemitigatethisriskbyinvestingincompanieswithareasonablefreefloatandwheresecuritiesareheavilytraded.Alsobylimitingtheportfolio’sbuylisttohighlytradedstocks,theriskofilliquidityismitigated.Goodresearchenablethefundteamtoidentifychangesinfundamentalsandbeproactiveininvestmentdecisionmaking.

Ininstanceswherewearepresentedwithapromisinginvestmentopportunity,beingshortoffundstopursuethatopportunityisalsoanextensionofliquidityrisk.Toguardagainstthisrisk,wehavearrangedseveraloverdraftfacilitiestodrawintoifandwhenopportunitiesarise.

Performance Volatility RisksThecompositionoftheportfoliowilldeterminetheportfolio’sabilitytooutperformthemarket.Ifmorevolatilestocksthatrespondmorethanproportionatelytomarketmovementsareselected,thereisalikelihoodthatthe

portfoliowilloutperformthebenchmarkAllSharePriceIndexinagrowingmarket,whileinadownturnitcanunder-performthemarket.Itisonceagainanattemptatbalancinggoodperformancewithacertainrisktoleranceinavolatileenvironment.

Measuringportfoliovolatilitythroughcalculationofaportfoliobetaisonemethodofkeepingourselvesawareofthesensitivitiesoftheportfolio.Inthecaseofthelongtermportfolio,wewouldnotattempttohandlemarketvolatilitybyencashingstocks,butwouldratherattempttoholdontofundamentallystrongstocksandrideoutlowperformingcycles.Forthis,weensureadequatecashgenerationbywayofdividendandotherincomeflowstokeepourdailyoperationsrunningsmoothlywhilewerideoutlowmarketperiods.Ontheotherhand,inthecaseofthetradingportfolio,itisnecessarytokeepanevenclosertabonmarketvolatility,sinceitneedstoregularlyencashitsprofitablepositionstoremainahighperformingportfolio.

Investment Performance RiskThisistheriskthattheportfoliowillnotmeettheinvestmentobjectivesbyover-performingthebenchmarkindices.ThiscanadverselyaffectthereputationoftheCompanyandhaveimpactinthefutureintermsofproventrackrecordandconfidencewhenraisingmoneyonfuturecapitalcalls.

Wemitigatethisriskbysettingaprocesswhichseekstomeetinvestmenttargetswithinstatedriskparameters.Portfolioperformance,valuationsandrisksaremonitoredbyfundmanagersandmanagedonaregularbasis.Regularmeetingsamongstthefundmanagementteamaswellasregularreviewoftheportfolioatboardmeetingsarepartofthisprocess.

Compliance RisksThelegalsupportservicestoGuardianFundManagementcomesthroughthemanagementservicescompanyoftheCarsonCumberbatchGroup,whichensuresthattheGuardianGroupcompaniescomplywithalllegalandregulatory

provisionsapplicabletoit.ThelegalfunctionproactivelyidentifiesandadvicesGFMtosetupappropriatesystemsandprocessesforlegalandregulatorycomplianceinrespectofallourinvestmentsandregulatedactivities.Wealsoensurelegalandregulatorycomplianceinanyforeigncountrythatweoperateinandinsuchinstancesthroughlegalcounselretainedinthosejurisdictions.

ProactivemonitoringofthecomplianceprocessisfollowedandweseethatourinvestmentsaremadeandtradesareexecutedinkeepingwiththeCompaniesAct,SECregulations,taxregulations,exchangecontrolregulationsandotherapplicableguidelines.ThelegaladvisorsoftheCompanyalsocarryoutperiodicawarenessprogrammestoeducateallstaffmembersonaregularbasis.

TheoperationsofCeylonInvestmentcomewithintherulesandregulationsapplicabletoallmarketparticipantsoperatingintheequity(listedandunlisted)anddebtmarketsofSriLanka,aswellastheregulatoryprovisionsapplicabletocompanieslistedontheCSEandregulationsapplicabletosecuritiestradingsetbytheSecuritiesandExchangeCommissionofSriLanka.

Oursystemsandprocessesarestructuredtosatisfythecriteriasetbytheseregulations,andstaffisconstantlykeptawareofthecomplianceneedsimposedbytheseregulations.AnindependentcomplianceofficerundertakesresponsibilityformaintainingacheckontheoverallcomplianceprocessandissupportedbytheinternalauditfunctionoftheCarsonsGroup.GFM,asanInvestmentManagerregisteredwiththeSEC,isalsosubjecttofurtherregulationbythecapitalmarketsregulator.

Operational RisksProfessionalism in Operational DealingsThefundmanagementteamatGFMhassignedaCodeofEthicswhichlaysdownprofessionalstandardsofconductanddealingthatisexpectedofstaff.Structurestoavoidconflictsofinterestandcompromisingofbestpractices


aresetupaspartofourprocess.Staffeducationcoversareasofsuchpracticeanddeclarationsbythestaffmembersoncomplianceinpersonalequitytradingaremandatory.

CompliancewithSECtradingrulesoninsidertrading,frontrunning,marketmanipulationetcarecheckedbycomparingtradingstatisticsbetweenportfoliosandpreapprovedpersonaltransactionofemployees,bytheComplianceOfficer.

ThecompliancewiththeCodeofEthicsensuresthattheconductoffundmanagersandotherstaffmembersdonotviolatethecodeofethicstowhichemployeesaresignatories.Someofthepertinentareascoveredincludeconflictofinterestbetweenportfolios,coordinationoftradesbetweenportfoliomanagerswithintheCompany,levelsofauthoritywhenapprovingtradesetc.Internalcontrolsandauditsarealsodonetoensuremonitoringandcompliance.

Systems and Process RisksWemanageoperationalrisksbyidentifyingrisksandformulatingplansfortheirmanagement,promotingbestpractices,implementinginternalcontrolsandsystemsandmonitoringcompliancewiththeseinternalguidelinesformanagingoperationalrisks.Operationalrisksmainlycovertheareasofsystemfailuretoensurecontinuityofdecisionmakingtodealwithcontingencies,ensuringefficiencyinoperationsandcorrectapplicationofrecommendedmanagementpractices,wherebackupproceduresarefollowedonaroutinebasis.Ouraccountingsystems,portfoliomanagementsystemsareregularlybackeduptopreventlossofdata.

Systemssupportfortheportfoliomanagementsoftwareismadeavailablethroughanannualmaintenanceagreementwiththesoftwarevendorwhichensuresonlinesupportforsystemissuesandqueries.AtthesametimethefinancialtransactionprocessingandreportingsystemarebasedonanERPsysteminuseatCarsonsGrouplevelandassuchbackupsupportservicesforthissystemareavailablethroughtheparentcompany’smanagementservicescompany.

Alsoinordertodealwithunexpectedcontingencies,wehavedevelopedandimplementedabusinesscontinuityplan,whichlooksafteraspectssuchasstaffdeploymentandsystemsbackupincaseofanunexpecteddisruptiontothebusiness.

ThisbusinesscontinuityplanformsapartoftheCarsonsGroup’sbusinesscontinuityplan,whichisregularlytestedandupgradedtomeetchangingneeds.

TheinternalauditfunctionoftheCarsonsGroup,ensuresthesafeguardingofCompanyassetsandrecommendsprocessimprovementsinareaswhereprocesscontrolfailuresarenoted.Compliancewiththeinvestmentobjectivesofeachportfolioinvolvescheckingwhetherfundmanagershaveadheredtotheinvestmentguidelinesforeachportfoliooperatingwithinsetlimitsandnotfallingtoprohibitedinvestments;aswellasmonitoringportfolioperformanceagainstthebenchmarksset.Furthercompliancewiththeoperatingprocessmanualinvolvescheckingtheapplicationofproperinternalcontrolssuchassegregationofduties,authoritylimits,approvalsandthatcashmanagementprocessesareinorder.

Staff RisksAfundmanagementoperationalunitrequiresqualifiedprofessionalswithexperienceinthefundmanagementindustry.Knowledgeoftheoperatingmechanismofthemarketaswellasitsnormsandethicsisofimportance.Weattempttopassonthisvaluablelocalknowledgetoourstaffatalllevels.Havingdiversityintheteam,developingastrongsecondlevel,traininganddevelopmentopportunities,arestandardpracticesoftheindustry,whichwebenchmarkourselveswith.Aperformancerelatedincentiveschemeforthestaffisinplaceandisbeingreviewed.Thenetworkingabilityofkeystafftosourcedealsisimportantinrunningasuccessfulfundmanagementoperationbybeingshownbothimportantbuysideandsellsidedealsbybrokers.

ThestaffofGFMareallprofessionallyqualifiedwithatrackrecordofexperienceintheindustry.

Astrongresearchteamhasbeendevelopedtocomplementthefundmanagementoperationandraisethestandardoftheinvestmentdecisionmakingprocess.Stafftraininganddevelopmentisidentifiedasanimportantareaofconcern,whileretentionismanagedthroughacomprehensiverewardstructureandincentivescheme,opportunitiesforcareerprogressionandacultureofbeingHRoriented.Collectivelythesestepshelpustoworktowardshavinganeffectivesuccessionplaninplace.

Reputation RiskAsaCompanythatcarriesoutaroleoftrustbetweenitselfandaclient,itisvitaltosafeguardthegoodnameandreputationofthebusiness.Further,nowbeinginthepublicdomainthroughunittrusts,safeguardingreputationriskisofutmostimportance.

Employeesarecommunicatedtherightvaluesfromtheinceptionbothbyformalcommunicationandbyexample.Ourscreeningprocessatinterviews,attemptstoselectpeopleoftherightcaliber,whiletrainingthemforhigherresponsibilityisongoing.TheextensivecomplianceprocessalsoensuresthattheCompanydoesnottaketheriskofprocessfailurethatwillleadtoreputationrisk.Maintaininggoodrelationshipswithallindustryandgovernmentstakeholdersfurtherhelpsmanageanycrisissituationsthatcandamagereputation.

Guardian Fund Management LimitedInvestmentManagers

Colombo25thJune2014


TheBoardofDirectorsofCeylonInvestmentPLChavepleasureinpresentingtotheshareholderstheirReport,togetherwiththeAuditedFinancialStatementsfortheyearended31stMarch2014.

ThedetailssetouthereinprovidethepertinentinformationrequiredbytheCompaniesActNo.07of2007,ListingRulesoftheColomboStockExchangeandrecommendedbestAccountingPractices.

TheAnnualReportwasapprovedbytheBoardofDirectorson25thJune2014.

1. GENERALCeylonInvestmentPLC(the"Company")isapubliclimitedliabilityCompanyincorporatedinSriLankain1919.

2. PRINCIPAL ACTIVITY OF THE COMPANY

TheprincipalactivitiesoftheCompanyanditsassociatecompanyaretoactasspecializedinvestmentvehiclesfocusingonlistedequityinvestments.

TherewerenosignificantchangesinthenatureoftheprincipalactivitiesoftheCompanyduringthefinancialyearunderreview.

3. REVIEW OF OPERATIONS AND FUTURE DEVELOPMENTS

TheChairman’sStatementandtheManagers’Commentaryonpages2to13provideanoverallassessmentofthebusinessperformanceoftheCompanyanditsfuturedevelopments.ThesereportstogetherwiththeauditedfinancialstatementsreflectthestateofaffairsoftheCompany.

4. FINANCIAL STATEMENTSTheFinancialStatementswhichincludetheStatementofComprehensiveIncome,StatementofFinancialPosition,StatementofCashFlow,StatementofChangesinEquityandnotesto

4.4. Investment in Financial Instruments – Available for Sale Financial Assets

InvestmentsinfinancialinstrumentsoftheCompanyrepresentsinvestmentsinavailableforsalefinancialassets,categorizedinto,

FairvaluehierarchyLevel1-quotedsecurities

FairvaluehierarchyLevel2andLevel3–unquotedandprivateequity(unlistedequityinvestments).

InvestmentsplacedatfairvaluehierarchyLevel1–quotedsecurities,asatthereportingdate,carriedafairvalueofRs.2,519.4mn(2013–Rs.2,018.7mn)inCompanyasdisclosedinnotes19.1and19.4.InvestmentsplacedatfairvaluehierarchyLevel2and3–unquoted/privateequity(unlisted)investments,asatthereportingdate,carriedafairvalueofRs.0.9mn(2013–Rs.191.5Mn)asdisclosedinnote19.2,19.3and19.5.

4.5. ReservesAsat31stMarch2014,thetotalreservesoftheCompanystoodatRs.7,751.8mn(2013-Rs.8,050.3mn).

ThemovementsaresetoutintheStatementofChangesinEquityandinnote24tothefinancialstatements.

4.6. Fair value through profit or loss financial assets reserve

Anygainsarisingfromfairvalueadjustmentwillbetransferredfromretainedearningsto“Fairvaluethroughprofitorlossfinancialassetsreserve”atreportingdateandanyrealizedlossesarisingwillbetransferredfrom“Fairvaluethroughprofitorlossfinancialassetsreserve”toretainedearningstotheextentthatthelossdoesnotexceedthebalanceheldinthesaidreserveasatthereportingdate.

Accordingly,duringtheyearanamountofRs.28.9mnwastransferredto(2013-43.4mnwastransferredfrom)“Fairvaluethroughprofit

Annual Report of the Board of Directors on the Affairs of the Company

theFinancialStatementsoftheCompanyfortheyearended31stMarch2014aresetoutonpages32to65ofthisReport.TheseFinancialStatementsdocomplywiththerequirementsoftheCompaniesActNo.07of2007.

4.1. RevenueTheCompanygeneratedarevenueofRs.496.8mn(2013–Rs.445.9mn).Adetailedanalysisoftherevenuefortheperiodisgiveninnote11tothefinancialstatements.

4.2. Financial results and appropriationsAnabridgementofthefinancialperformanceoftheCompanyispresentedinthetablebelow:

(In Rupees Thousands) For the year ended 31st March

2014

2013

ProfitfortheyearRetainedearningsbroughtforwardfrompreviousyearTransfers

1,152,357

4,615,99428,910

1,181,968

3,600,606(43,436)

Profitavailableforappropriationsfromwhichthefollowingappropriations/distributionshavebeenmade:Dividendspaid

5,797,261(418,688)

4,739,138(123,144)

Retainedearningscarriedforward 5,378,573 4,615,994

4.3. Significant accounting policiesTheaccountingpoliciesadoptedinthepreparationofthesefinancialstatementsaregivenonpages36to42.

Asexplainedinnote10tothefinancialstatements,themanagementisintheprocessofassessingtheimpact,ifany,onadoptionofthenewstandardswhichhavebecomeeffectivefrom1stApril2014.


orlossfinancialassetsreserve”resultingfromthemovementsinfairvalueasshownintheStatementofChangesinEquity.

4.7. Available for sales financial assets reserve

Duringtheyear,themovementfrom‘Availableforsalefinancialassetsreserve’amountedtoRs.215.3mn(2013–movementtoavailableforsalefinancialassetsreserveamountedtoRs.60.9mn)arisingoutofrealizedgainsandadjustmentonfairvaluationofinvestmentsinAvailableforsalefinancialassets.

5. STATEMENT OF DIRECTORS RESPONSIBILITIES

TheresponsibilitiesoftheDirectorsinrelationtotheFinancialStatementsaredetailedinthefollowingparagraphs,whilsttheresponsibilitiesoftheAuditorsaresetoutintheIndependentAuditors’Report.

AccordingtotheCompaniesActNo.07of2007andtheSriLankaAccountingandAuditingStandardsActNo.15of1995,theDirectorsarerequiredtoprepareFinancialStatementsforeachfinancialyear,givingatrueandfairviewofthestateofaffairsoftheCompanyasattheendofthefinancialyearandoftheperformanceforthesaidperiod.

TheFinancialStatementscompriseofinteralia:

• aStatementofFinancialPosition,whichpresentsatrueandfairviewofthestateofaffairsoftheCompanyanditsassociatecompanyasattheendofthefinancialyear:

• aStatementofcomprehensiveincomeoftheCompanyanditsassociatecompany,whichpresentsatrueandfairviewoftheprofitandlossoftheCompanyanditsassociatecompanyforthefinancialyear.

Inpreparingthesefinancialstatements,theDirectorsarerequiredtoensurethat:

> appropriateaccountingpolicieshavebeenselectedandappliedconsistently,whilematerialdepartures,ifany,havebeendisclosedandexplained;

> allapplicableAccountingStandardshavebeencompliedwith;

> reasonableandprudentjudgmentsandestimateshavebeenmade;and

> providestheinformationrequiredbyandotherwisecomplywiththeCompaniesActNo.07of2007andtheListingRulesoftheColomboStockExchange.

TheDirectorsareresponsibleforensuringthattheCompanymaintainssufficientaccountingrecordstodisclosewithreasonableaccuracy,thefinancialpositionoftheCompany,inordertoensurethatitsFinancialStatementshavebeenpreparedandpresentedinaccordancewiththeSriLankaAccountingandAuditingStandardsActNo.15of1995andmeetwiththerequirementsoftheCompaniesActNo.07of2007.

TheyarealsoresponsiblefortakingreasonablemeasurestosafeguardtheassetsoftheCompanyandinthisregardtogiveproperconsiderationtotheestablishmentandeffectiveoperationofappropriatesystemsofinternalcontrolwithaviewtoprevent,detectandrectifyfraudandotherirregularities.

TheseFinancialStatementshavebeenpreparedonagoingconcernbasis,sincetheDirectorsareoftheviewthattheCompanyhasadequateresourcestocontinueinoperation,fortheforeseeablefuturefromthedateofsigningthesefinancialstatements.

TheDirectorsarealsooftheviewthattheyhavedischargedtheirresponsibilitiesassetoutinthisstatement.

6. OUTSTANDING LITIGATIONTherearenolitigationscurrentlypendingagainsttheCompany.

7. INDEPENDENT AUDITORS’ REPORT

TheIndependentAuditors’Reportonthefinancialstatementsisgivenonpage31oftheAnnualReport.

8. INTERESTS REGISTERTheCompanymaintainsanInterestsRegisterconformingtotheprovisionsoftheCompaniesAct,No.07of2007.AllDirectorshavemadedeclarationsasprovidedforinSection192(2)oftheCompaniesActaforesaid.

TherelevantdetailsasrequiredbytheCompaniesAct,No.07of2007havebeenenteredintheInterestsRegisterduringtheyearunderreview.

TheInterestsRegisterisavailableforinspectionasrequiredundertheCompaniesAct.

8.1. Remuneration of DirectorsDirectors’remunerationforthefinancialyearended31stMarch2014isgiveninnote12tothefinancialstatementsonpage43oftheAnnualReport.

8.2. Directors’ Interest in contracts and shares

TheRelatedPartyTransactionsoftheCompanyasrequiredbytheSriLankaAccountingStandardsLKAS24RelatedPartyDisclosuresaredisclosedinnote28totheFinancialStatementsandhavebeendeclaredatMeetingsoftheBoardofDirectors.TheDirectorshavehadnodirect



orindirectinterestinanyothercontractsorproposedcontractsinrelationtothebusinessoftheCompany,whiletheyhadthefollowinginterestsintheordinarysharesoftheCompany,asshowninthetablebelow:

Directors No.of shares as at

31st March 2014

1st April 2013

Mr.I.Paulraj(Chairman) 255 255Mr.D.C.R.Gunawardena 255 255Mr.A.P.Weeratunge - -Mrs.M.A.R.C.Cooray - -Mr.A.deZ.Gunasekera - -Mr.V.M.Fernando - -Mr.K.Selvanathan - -

9. DIRECTORSThenamesoftheDirectorswhoservedduringtheyeararegivenunderCorporateInformationprovidedintheinnerbackcoveroftheAnnualReport.

9.1. Directors to retire by rotationIntermsofArticles89,90and91oftheArticlesofAssociationoftheCompany,Mrs.M.A.R.C.CoorayandMr.A.P.Weeratungeretirebyrotationandbeingeligibleofferthemselvesforre-election.

9.2. Appointment of Directors who are over 70 years of age

UpontherecommendationoftheNominationCommitteeandtheBoard,itisrecommendedthatMessrs.I.PaulrajandA.deZ.Gunasekerawhoareover70yearsofagebere-appointedasDirectorsoftheCompanyforafurtherperiodofoneyearfromtheconclusionoftheAnnualGeneralMeetingandthattheagelimitstipulatedinSection210oftheCompaniesAct,No.07of2007shallnotbeapplicable.

10. AUDITORSCompany’sAuditorsduringtheyearunderreviewwereMessrs.KPMG,CharteredAccountants.

AsumofRs.307,000/-waspaidtothembytheCompanyasauditfeesfortheyearended31stMarch2014(2013-Rs.275,000/-).Inadditiontotheabove,theAuditorswerepaidRs.65,000/-(2013-Rs.63,000/-)asprofessionalfeesforauditrelatedservices.

TheretiringAuditorshaveexpressedtheirwillingnesstocontinueinoffice.Aresolutiontore-appointthemasAuditorsoftheCompanyandauthorizingtheDirectorstofixtheirremunerationwillbeproposedattheforthcomingAnnualGeneralMeeting.

TheAuditCommitteereviewedtheappointmentoftheAuditors,itseffectivenessandtheirrelationshipwiththeCompany,includingthelevelofauditandnon-auditfeespaidtotheAuditors.

10.1. Auditors’ Relationship or any interest with the Company

TheDirectorsaresatisfiedthat,basedonwrittenrepresentationsmadebytheindependentAuditorstotheBoard,theAuditorsdonothaveanyinterestwiththeCompanythatwouldimpairtheirindependence.

11. SIGNIFICANT EVENTS DURING THE YEAR

Therewerenosignificanteventsduringtheyear.

12. RELATED PARTY TRANSACTIONS EXCEEDING 10% OF THE EQUITY OR 5% OF THE TOTAL ASSETS OF THE COMPANY

TherewerenotransactionsenteredintobytheCompanyintheirordinarycourseofbusiness,thevalueofwhichexceeded10%oftheshareholders’equityor5%ofthetotalassetsoftheCompanyduringtheyear.

Thedetailsoftherelatedpartytransactionsaregiveninnote28onpages56to57ofthefinancialstatements.

13. CORPORATE GOVERNANCETheBoardhasensuredthattheCompanyhascompliedwiththeCorporateGovernancerulesaspertheListingRulesoftheColomboStockExchange.

13.1. Board of DirectorsThefollowingDirectorsheldofficeasatthereportingdateandtheirbriefprofilesaregivenonpages25and26oftheAnnualReport.

Directors Executive/ Non-Executive/ Independent

Mr.I.Paulraj(Chairman) Non-Executive/Independent*

Mr.D.C.R.Gunawardena Non-Executive

Mr.A.P.Weeratunge Executive

Mrs.M.A.R.C.Cooray Non-Executive/Independent**

Mr.A.deZ.Gunasekera Non-Executive/Independent***

Mr.V.M.Fernando Non-Executive/Independent****

Mr.K.Selvanathan Executive

EachoftheNon-ExecutiveDirectorsoftheCompanyhavesubmittedasigneddeclarationonIndependence/Non-IndependenceasperRule7.10.2(b)oftheListingRulesoftheColomboStockExchange(CSE).ThesaiddeclarationsweretabledattheBoardMeetingheldon25thJune2014,inordertoenabletheBoardofDirectorstodeterminetheIndependence/Non-IndependenceofeachoftheNon-ExecutiveDirectors,intermsofrule7.10.3(a)oftheListingRulesoftheCSE.


*TheBoardhasdeterminedthatMr.I.PaulrajisanIndependentDirectorinspiteofbeingontheBoardformorethan9yearsandbeingaDirectorofCeylonGuardianInvestmentTrustPLC,inwhichamajorityoftheotherDirectorsoftheBoardarealsoDirectorsandwhichhasasubstantialshareholdingintheCompany,sinceheisnotdirectlyinvolvedinthemanagementoftheCompany.

**TheBoardhasdeterminedthatMrs.M.A.R.C.CoorayisanIndependentDirectorinspiteofbeingaDirectorofCeylonGuardianInvestmentTrustPLC,inwhichamajorityoftheotherDirectorsoftheBoardarealsoDirectorsandwhichhasasubstantialshareholdingintheCompany,sincesheisnotdirectlyinvolvedinthemanagementoftheCompany.

***TheBoardhasdeterminedthatMr.A.deZ.GunasekeraisanIndependentDirectorinspiteofbeingaDirectorofCeylonGuardianInvestmentTrustPLC,inwhichamajorityoftheotherDirectorsoftheBoardarealsoDirectorsandwhichhasasubstantialshareholdingintheCompany,sinceheisnotdirectlyinvolvedinthemanagementoftheCompany.

****TheBoardhasdeterminedthatMr.V.M.FernandoisanIndependentDirectorinspiteofbeingaDirectorofCeylonGuardianInvestmentTrustPLC,inwhichamajorityoftheotherDirectorsoftheBoardarealsoDirectorsandwhichhasasubstantialshareholdingintheCompany,sinceheisnotdirectlyinvolvedinthemanagementoftheCompany.

13.2 Remuneration CommitteeIntermsofRule7.10.5oftheListingRulesoftheColomboStockExchange,theRemunerationCommitteeofCarsonCumberbatchPLC(CCPLC),theultimateParentCompany,functionsastheRemunerationCommitteeoftheCompanyandcomprisesofthefollowingmembers:

RemunerationCommitteemeetingswhendeterminationsaremadeinrelationtotheremunerationoftherespectiveDirectors.

TheCommitteeisauthorisedbytheBoardtoseekappropriateprofessionaladviceinternallyandexternallyasandwhenitconsidersnecessary.

TheRemunerationCommitteemeetsatleasttwiceayear.

DuringtheperiodunderreviewtheCommitteehadtwomeetingsandtheattendanceoftheMembersoftheRemunerationCommitteewasasfollows:

Remuneration Committee Members

Meetings attended (out of two)

Mr.I.Paulraj(Chairman) 02

Mr.M.Moonesinghe* -

Mr.D.C.R.Gunawardena 02

Mr.R.Theagarajah** -

*ResignedfromtheCCPLCBoardwitheffectfrom31stMarch2014andaccordinglyfromtheRemunerationCommitteewitheffectfrom31stMarch2014

**AppointedtotheRemunerationCommitteewitheffectfrom1stApril2014

ReportingandResponsibilities:TheCommitteeChairmanreportsformallytotheBoardonitsproceedingsonallmatterswithinitsdutiesandresponsibilities.TheCommitteemakesrecommendationstotheBoardasdeemedappropriateonanyareawithinitslimitwhereactionorimprovementsareneeded.

AggregatedremunerationpaidtotheNon-ExecutiveDirectorsoftheCompanyisdisclosedundernote12onpage43oftheAnnualReport.ExecutiveDirectorsarenotcompensatedfortheirroleontheBoard.

Remuneration Committee Members

Executive/Non-Executive/Independent

Mr.I.Paulraj(Chairman)

Non-Executive/IndependentDirectorofCCPLC

Mr.M.Moonesinghe*


Mr.D.C.R.Gunawardena

Non-ExecutiveDirectorofCCPLC

Mr.R.Theagarajah**


*ResignedfromtheCCPLCBoardwitheffectfrom31stMarch2014andaccordinglyfromtheRemunerationCommitteewitheffectfrom31stMarch2014

**AppointedtotheRemunerationCommitteewitheffectfrom1stApril2014

ScopeandObjective:TheprimaryobjectiveoftheRemunerationCommitteeistoleadtoestablishaformalandtransparentprocedureforthedevelopmentofaremunerationpolicyandtheestablishmentofaremunerationstructure.

AremunerationpolicyhasbeenformulatedbasedonmarketandindustryfactorsandindividualperformanceforallgroupCompanies.

FunctionsandProceedings:TheRemunerationCommitteerecommendstotheBoardtheremunerationtobepaidtotheChiefExecutiveOfficer,ExecutiveDirectorsandNon-ExecutiveDirectors.BasedontherecommendationoftheRemunerationCommittee,theBoardapprovesremunerationtotherespectiveDirectors.

TheChiefExecutiveOfficer,Director-in-chargeandothermembersoftheseniormanagementmaybeinvitedtoattendmeetingstodiscusstheperformanceoftheExecutiveDirectorsandmakeproposalsasnecessary.NeitherExecutivenorNon-ExecutiveDirectorsareinvolvedin


13.3. Audit CommitteeIntermsofRule7.10.6oftheListingRulesoftheColomboStockExchange,theAuditCommitteeofCarsonCumberbatchPLC(CCPLC),theultimateParentCompany,functionsastheAuditCommitteeoftheCompanyandcomprisesofthefollowingmembers:

Audit Committee Members


Mr.V.P.Malalasekera(Chairman)



Non-ExecutiveDirectorofCCPLC

Mr.F.Mohideen Non-ExecutiveDirectorofCCPLC

TheAuditCommitteeReportisgivenonpages28to29ofthisAnnualReport.

13.4. Directors Meetings Attendance DuringthefinancialyeartheBoardofDirectorshad04BoardMeetingsandtheattendanceoftheDirectorswasasfollows:

Directors Meetings attended (out of 04)



Mr.A.P.Weeratunge 04

Mrs.M.A.R.C.Cooray 03

Mr.A.deZ.Gunasekera 04

Mr.V.M.Fernando 03

Mr.K.Selvanathan 04

14. NOMINATION COMMITTEETheNominationCommitteeofCeylonGuardianInvestmentTrustPLC(GUAR),theParentCompany’sNominationCommitteefunctionsastheCompany’sNominationCommittee.

DuringtheperiodunderreviewtheCommitteehadtwomeetingsandtheattendanceoftheMembersoftheNominationCommitteewasasfollows:

Nomination Committee Members

Meetings attended (out of two)


Mrs.M.A.R.C.Cooray 01


15. INTERNAL CONTROL AND RISK MANAGEMENT

Theultimateresponsibilitytoestablish,monitorandreviewacompany-wideinternalcontrolsystemrestswiththeBoardofDirectors.Theintensity,depthandthetolerancelimitsforeachcomponentoftheinternalcontrolsystemwouldbebasedontheweightoftheelementofriskimposedonthesustenanceofthebusinessbytherespectiveareaofoperation.Whilstastronginternalcontrolsystemwouldmitigatethecrystallizationofriskelementstoagreaterextent,employmentofexternalsupportstructureswouldalsobenecessarybasedontheriskassessmentsmadethereon.

Effectivemaintenanceofinternalcontrols,riskidentificationandmitigationishandeddowntotherespectivemembersofseniormanagementwithintheguidelinesofbenchmarkpolicies,proceduresandauthoritylimitsclearlylaiddown.

GroupInternalAudit,whosescopeofscrutinyisentirelydrivenbythegradingoftheriskinvolvedwillbemonitoringandprovidingthefeedbacktothemanagementandtherespectiveAuditCommittee.RegularsubmissionofcomplianceandinternalsolvencycertificatesvouchedbytheheadsoftherespectivedivisionsasamandatoryagendaitemkeepstheDirectorsabreastofthehealthoftheCompany’sresourcebaseandgovernancerequirements.

TheNominationCommitteeofGUARcomprisesofthefollowingmembers:

Nomination Committee Members


Mr.I.Paulraj(Chairman)

Non-Executive/IndependentDirectorofGUAR

Mrs.M.A.R.C.Cooray Non-Executive/IndependentDirectorofGUAR


Non-ExecutiveDirectorofGUAR

ScopeandObjective:

TheprimaryobjectiveoftheNominationCommitteeistoleadtheprocessforBoardappointmentsofnewDirectorswithinthegroupcompaniesandthenominationsofmemberstorepresenttheCompanyingroupcompanies/investeecompanies.

FunctionsandProceedings:

TheNominationCommitteerecommendsnewappointmentstotheBoard.BasedontherecommendationoftheNominationCommittee,theBoardapprovesthenewappointmentsofExecutiveandNon-ExecutiveDirectorstotheBoard.

AnyDirectoroftheBoardandtheChiefExecutiveOfficer/Director-in-ChargeandothermembersofseniormanagementmaybeinvitedtoattendMeetingsoftheNominationCommittee.TheCommitteemayalsoinviteappointedexternalconsultantstoaidtheCommitteeinthedischargeofitsduties.

TheCommitteeisauthorisedbytheBoardtoseekappropriateprofessionaladviceinternallyandexternallyasandwhenconsiderednecessary.

TheNominationCommitteemeetsatleasttwiceayear.



ThisallowstheBoardtohavetotalcontrolofthefulfillmentofgovernancerequirementsbyprovidingopportunitytotaketimelypreventiveactionincaseofpotentialdeteriorationofstatusquo.MoredetaileddescriptionoftheriskmanagementstrategiesoftheCompanyisgivenonpages14to17.

16. HUMAN RESOURCES ThemanagementoftheCompany’sinvestmentsisundertakenbyGuardianFundManagementLimited(GFM)andmanagementsupportservicesareprovidedbyCarsonsManagementServices(Private)Limited.

GFMcontinuedtoinvestinhumancapitaldevelopmentandimplementeffectivehumanresourcepracticesandpoliciestodevelopandbuildanefficientandeffectiveworkforcealignedaroundnewbusinessprioritiesoftheCompanyandtoensurethatitsemployeesaredevelopingtheskillsandknowledgerequiredforthefuturesuccessoftheCompany,centeredaroundthecorecompetenciesrequiredbyaninvestmenthouse.

17. EQUITABLE TREATMENT TO SHAREHOLDERS

TheCompanyendeavoursatalltimestoensureequitabletreatmenttoallshareholders.

18. DIVIDENDSTheCompanypaida1stinterimdividendofRs.2/50pershareresultinginatotaloutflowofRs.246,287,185/-duringtheyear.

TheDirectorsdonotrecommendafinaldividendforthefinancialyearended31stMarch2014.

Thedetailsofthedividendspaidduringtheyeararesetoutinnote17tothefinancialstatements.

22. CAPITAL EXPENDITURE TheCompanyhasnotincurredanycapitalnatureexpenditureduringtheyearunderreview(2013-Nil).

23. STATUTORY PAYMENTSTheDirectorstothebestoftheirknowledgeandbeliefweresatisfiedthatallstatutorydueshavebeenpaiduptodateorhavebeenprovidedforinthefinancialstatements.

24. GOING CONCERNTheBoardofDirectorsissatisfiedthattheCompanyhasadequateresourcestocontinueitsoperationsintheforeseeablefuture.Accordingly,thefinancialstatementsarepreparedbasedonthegoingconcernconcept.

25. EVENTS AFTER THE REPORTING PERIOD

Subsequenttothereportingdate,nocircumstanceshavearisen,whichwouldrequireadjustmentstoordisclosuresinthefinancialstatements,otherthanthosedisclosedinnote26tothefinancialstatementsifany.

26. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

Contingentliabilitiesandcommitmentsmadeonaccountofcapitalexpenditureasat31stMarch2014aregiveninnote27tothefinancialstatementsifany.

27. CORPORATE DONATIONSTherewerenodonationsgrantedduringtheyear.

28. SHARE INFORMATIONThedetailsrelatingtoearnings,netassets,marketvaluepershareandinformationonsharetradingisgivenonpages66to67andpages74to75oftheAnnualReport.

19. SOLVENCY TESTTheDirectorsweresatisfiedwiththeSolvencyTestrequirementunderSection56(2)oftheCompaniesAct,No.07of2007immediatelyafterthedistributionofthe1stinterimdividenddeclaredinMarch2014.TheCompany'sAuditors,Messrs.KPMG,CharteredAccountantsissuedtheCertificateofSolvencyconfirmingsame.

20. STATED CAPITALTheStatedCapitaloftheCompanyasat31stMarch2014wasRs.673,529,144/-comprisingof98,514,874ordinaryshares.ThemovementinStatedCapitaloftheCompanyisgiveninnote23tothefinancialstatements.TherewasnochangeintheStatedCapitaloftheCompanyduringtheyear.

21. INVESTMENTS Investmentsrepresent,investmentsinassociates,investmentsinavailableforsalefinancialassetsandinvestmentsinfairvaluethroughprofitorlossfinancialassets.

• Detailsoninvestmentinassociatecompanyisgiveninnote18inpage46.

• Detailsonavailableforsalefinancialassetsatfairvaluearedisclosedinnote19inpages47to50,comprisingthoseinvestmentswhichareheldforalongertenure,usuallyover3-5years.ThefairvalueofthesaidinvestmentportfoliostoodatRs.2,520.3mn(2013-2,210.3mn)attheendofthefinancialyear.

• ThefairvaluethroughprofitorlossportfolioengagedinactivetradingtorealizethebenefitsofthemovementsinthestockmarketandiscarriedintheStatementoffinancialpositionatfairvalueasgiveninnote21inpages51to53.ThecarryingvalueofthefairvaluethroughprofitorlossfinancialassetsoftheCompanyasat31stMarch2014wasRs.644.8mn(2013-Rs.503.6mn).



29. TWENTY MAJOR SHAREHOLDERSTheParentCompany,CeylonGuardianInvestmentTrustPLCholds64.36%ofthetotalordinarysharesinissueoftheCompany.

Twentymajorshareholderswithcomparatives:

As at 31st March

Name of Shareholder 2014 2013No. of shares % No. of shares %

CeylonGuardianInvestmentTrustPLC-A/cNo.3 63,407,518 64.36 63,407,518 64.36

ThurstonInvestmentsLimited 1,924,006 1.95 1,924,006 1.95

EmployeesTrustFundBoard 1,757,925 1.78 1,757,925 1.78

Mrs.M.L.deSilva 1,305,380 1.33 1,305,380 1.33

Miss.G.I.A.deSilva 1,277,422 1.30 1,277,422 1.30

Mr.K.C.Vignarajah 1,244,769 1.26 1,244,769 1.26

WaldockMackenzieLtd/Mr.H.M.S.Abdulhussein 997,944 1.01 1,191,756 1.21

Mr.G.J.W.deSilva 854,000 0.87 854,000 0.87

OakleyInvestmentsLimited 795,600 0.81 795,600 0.81

J.B.Cocoshell(Pvt)Ltd. 790,808 0.80 773,142 0.78

DFCCBankA/c1 765,000 0.78 735,000 0.75

Mr.Y.H.Abdulhussein 752,110 0.76 658,410 0.67

Miss.R.E.W.Jayasuriya 748,912 0.76 675,733 0.69

Mrs.S.E.Lokhandwalla 569,176 0.58 - -

CommercialBankofCeylonLtd./Mr.K.C.Vignarajah

496,122 0.50 496,122 0.50

CocoshellActivatedCarbonCompanyLimited 466,315 0.47 456,915 0.46

WaldockMackenzieLtd./Mr.M.A.N.Yoosufali 443,760 0.45 441,920 0.45

BankofCeylonNo.1Account 442,000 0.45 442,000 0.45

AitkenSpencePLC–A/cNo.2 440,339 0.45 440,339 0.45

MercantileBank(Agency)PrivateLimited 409,045 0.42 409,045 0.42

30. ANNUAL REPORTTheBoardofDirectorson25thJune2014approvedtheFinancialStatementsoftheCompany,togetherwiththeReviewswhichformpartoftheAnnualReport.TheappropriatenumberofcopiesoftheAnnualReportwillbesubmittedtotheColomboStockExchange,theSriLankaAccountingandAuditingStandardsMonitoringBoardandtheRegistrarGeneralofCompanies,withintheapplicabletimeframes.

31. ANNUAL GENERAL MEETINGThe68thAnnualGeneralMeetingoftheCompanywillbeheldonWednesday,the30thdayofJuly2014at9.30a.m.atHiltonColombo,“GrandBallroom”,No.2,SirChittampalamA.GardinerMawatha,Colombo2,SriLanka.

TheNoticeoftheAnnualGeneralMeetingsettingoutthebusinesswhichwillbetransactedthereatisonpage76oftheAnnualReport.

SignedonbehalfoftheBoard,

(Sgd.) (Sgd.) I. Paulraj D.C.R. GunawardenaChairman Director

(Sgd.) K.D. De Silva (Mrs.) Director Carsons Management Services (Private) Limited Secretaries

Colombo25thJune2014


Profiles of the Directors

ISRAEL PAULRAJ IsraelPaulrajistheChairmanofCeylonGuardianInvestmentTrustPLC,GuardianCapitalPartnersPLCandRubberInvestmentTrustLimited.HeservesasaDirectorofCarsonCumberbatchPLCandofseveralofthesubsidiarycompanieswithintheCarsonsGroup.

HeservedasPastChairmanoftheFederationofExportersAssociationsofSriLankaandTheCoconutProductsTradersAssociation.HewasamemberoftheExecutiveCommitteeoftheCeylonChamberofCommerce,NationalChamberofCommerceofSriLankaandShippersCouncil.HeservedontheBoardofArbitratorsoftheCeylonChamberofCommerce.HehasservedasHony.GeneralSecretaryoftheCentralCouncilofSocialServices,Hony.TreasurerofTheChristianConferenceinAsia,PresidentoftheChurchofCeylonYouthMovementandHony.TreasureroftheNationalChristianCouncilofSriLanka.HehasalsoservedasChairmanoftheIncorporatedTrusteesoftheChurchofCeylon.

HealsoservedonthePresidentialTaskForceonNon-TraditionalExportandImportCompetitiveAgriculturesetupbyPresidentR.Premadasa.HeservedasChairmanoftheEcumenicalLoanFundofSriLankaandonitsInternationalBoardinGeneva.HewasamemberoftheCommercialLawReformCommissionandhasservedontheParliamentaryConsultativeCommitteeonInternalandInternationalTrade.

HeholdsaBachelorofLawDegreeandanExecutiveDiplomainBusinessAdministration.

CHANDIMA GUNAWARDENAChandimaGunawardenaservesasaNon-Independent,Non-ExecutiveDirectorofCarsonCumberbatchPLCandinmostoftheCarsonsGroupCompaniesinSriLankaandoverseas.HeisalsoaDirectorofBukitDarahPLC.SinceassumingNon-ExecutivestatusintheGroup,heservesasanadvisortotheGroup’sStrategicPlanningandManagementforumsinSriLankaandservesonBoardCommitteesincludingtheAuditCommitteesoftheGroupinSriLankaandoverseascoveringalloperatingsectorsoftheGroup.

Mr.GunawardenahasoverfourdecadesofexperienceinvariedfieldsofbusinessandcommercialactivitiesandhasheldseniorpositionsinCorporate,MercantileandStateInstitutions.HewasappointedtotheCarsonsGroupDirectoratein1990.

HehasservedintheManagementCommitteeofTheCeylonChamberofCommerceforover10yearsandwasaFounderCouncilmemberoftheSriLankaInstituteofDirectors(SLID)andcontinuedtoserveinthecouncilforover10years.

HeisaFellowoftheCharteredInstituteofManagementAccountants,UK.

AJITH WEERATUNGE AjithWeeratungeisaDirectoroftheCarsonCumberbatchGroup’sManagementCompany,CarsonsManagementServices(Private)LimitedandholdsthepositionofHeadofFinance.HeisalsoaDirectorofEquityOnePLCandEquityTwoPLC,aswellastheGroup’sInvestmentHoldingSector-RubberInvestmentTrustLimitedandGuardianFundManagementLimited.Accountsformorethan30yearsoffinancerelatedexperienceinthemercantilesectorandhasheldpositionsinLankaWalltileLtd.,UnionApparels(Pvt)Ltd.,JohnKeellsHoldingsPLC,PhoenixIndustries(Pvt)LtdandCeylonBeverageHoldingsPLC.

HeisaFellowmemberoftheCharteredInstituteofManagementAccountantsofUK.

ROSE COORAYRoseCoorayisaDirectorofCeylonGuardianInvestmentTrustPLCandHattonNationalBankPLC.ShefunctionsasthechairpersonoftheBoardIntegratedRiskCommitteeandasamemberoftheBoardAuditCommitteeoftheHattonNationalBankPLC.SheisaretiredDeputyGovernoroftheCentralBankofSriLankawheresheservedforover35years.

OnreleasefromtheCentralBank,shehadservedtheMinistryofFinanceinthecapacityofDirectorGeneralFiscalPolicyandEconomicAffairsDepartmentfornearly6years,representedtheGovernmentontheBoardsofDFCCBank,SriLankaInstituteofInformationTechnology,SriLankaTelecom,CeylonElectricityBoard,DeLaRueCurrencyandSecurityPrint(Pvt)Ltd,ExportDevelopmentBoard,NationalHousingandDevelopmentAuthorityandrepresentedtheMonetaryBoardonWestCoastPower(Pvt)Ltd.

ShehasfunctionedastheViceChairpersonoftheInstituteofBankersofSriLankafor5yearsandhasservedonanumberofCommitteesatnationallevelcoveringavarietyofsubjectsrepresentingtheMinistryofFinanceandtheCentralBank.ShehasalsorepresentedtheCentralBankandtheMinistryofFinanceatvariousinternationalmeetings/seminars.

Mrs.Coorayhasbeeninvolvedextensivelyinpolicymakingandimplementingprojectsandprogrammes,especiallyintheareaofregionaldevelopmentandmicrofinance.ShehaswideexperienceinnegotiatingloanswithmultilateralandotherdonorsaswellasbilateraltradeagreementsonbehalfoftheGovernment.Herarticles/papershavebeenpublishedinprofessionaljournals.


ASOKA DE. Z. GUNASEKERAAsokaGunasekeraisaDirectorofCeylonGuardianInvestmentTrustPLC.AlsoservesasAlternateDirectortoMr.I.WSenanayake(Chairman)ofIWSHoldings(Pvt)Ltd.andinmostGroupcompanies.PastChairmanoftheNationalChamberofCommerceofSriLankaandPastPresidentoftheCeylonNationalChamberofIndustries.HeisaPastInternationalDirectorandaBoardAppointeeofLionsClubsInternationalandwasalsoaMemberoftheNationalPoliceCommissionofSriLanka.HeservedasLegalAdvisorandSecretarytotheMinistryofPostsandTelecommunications;Co-ordinatingSecretarytotheMinistryofPowerandEnergyandMinistryofHighwaysandwastheActingSecretarytotheMinistryofPolicyPlanning.

HeisanAttorney-at-Law&NotaryPublic.

MANILAL FERNANDOManilalFernandoisaDirectorofCeylonGuardianInvestmentTrustPLCandiscurrentlytheChairmanofShippingCargoLogistics(Pvt)Ltd.,HyundaiLanka(Pvt)Ltd.andDynamicAVTechnologies(Pvt)Ltd.DirectorofPirarus(Pvt)Ltd.,AitkenSpence&Co.PLC,SriLankanAirlinesLimited,StallionPlantations(Pvt)Ltd.andEcoCorpAsiaPrivateLimited.HeisalsoaTrusteeofJosephFraserMemorialHospital.

HehasbeenthePastPresidentoftheFootballFederationofSriLankafrom1979to1999,aswellastheVicePresidentoftheNationalOlympicCommitteeofSriLankafrom1990todate.

HeisanAttorney-at-Law&NotaryPublic.

Profiles of the Directors

KRISHNA SELVANATHANKrishnaSelvanathanisaDirectorofCarsonsManagementServices(Private)Limited,LionBrewery(Ceylon)PLCandtheInvestmentSectorCompaniesoftheCarsonsGroup.HeisalsoaDirectorofCarlsbergIndia(Pvt)Ltd.

HeholdsaBADegreeinAccounting&FinanceandBusinessAdministrationfromtheUniversityofKent,U.K.


RUVINI FERNANDO RuviniFernandoistheDirectorandCEOofGuardianFundManagementLimited,theinvestmentmanagementcompanyoftheCarsonsGroupandaDirectorofGuardianAcuityAssetManagementLimited,ajointventurecompanyoftheGuardianGroup,responsibleforoperatingandmanaginglicensedunittrusts.DirectoroftheSriLankaFund-aforeignincorporatedcountryfundmanagedbyGuardianFundManagementLimited.

Countsover24yearsworkexperienceinthefieldsofManagementAccounting,Finance,ResearchAnalysis,StrategicPlanningandInvestments,withintheHayleysGroupandCarsonCumberbatchGroup.MemberoftheFinance,BankingandCapitalMarketsCommitteeoftheCeylonChamberofCommerce.

WasaformervisitingfacultymemberofthePostgraduateInstituteofManagementintheMBAprogramme.MemberoftheRegainingSriLankaTourismSteeringCommittee,akeypolicymakingforumofthegovernmentfromJanuary2002toJanuary2004.FellowoftheCharteredInstituteofManagementAccountants,UKandtheAssociationofCharteredCertifiedAccountants,UK.HasaMastersDegreeinBusinessAdministrationfromthePostgraduateInstituteofManagement(PIM),UniversityofSriJayewardenepura,SriLanka.

NILOO JAYATILAKENilooJayatilakeisaDirectorofGuardianFundManagementLimitedandheadstheportfoliomanagementdivisionofthemanagementcompany.AlternateDirectorofGuardianAcuityAssetManagementLimitedandrepresentsthecompanyontheUnitTrustAssociationofSriLanka.Counts20yearsofexperienceintheinvestmentsandportfoliomanagementfield.PriortojoiningtheCarsonsGroupworkedasFundManageratTheUnitTrustManagementCompanyLimited,managersofCeybankUnitTrustFundsinSriLanka.FellowMemberofthe

CharteredInstituteofManagementAccountants,UKandAssociateMemberoftheInstituteofCharteredSecretariesandAdministrators,UK.

THARINDA JAYAWARDANAHeadofResearchofGuardianFundManagementLtd.Hehasover6yearsexperienceininvestmentresearch.PriortojoiningtheCarsonCumberbatchGroupheworkedasafinancialanalystatJBSecuritiesLtd.HeisaCFACharterHolderandanAssociateMemberoftheCharteredInstituteofManagementAccountants(UK).HealsohasafirstclassB.Sc(Hons)inFinancefromtheUniversityofSriJayewardenepura.

SUMITH PERERAFundManager,GuardianFundManagementLtd.Hasover7yearsofexperienceinthefieldofAssetManagementworkingasaFundManagerforCAAMSaudiFransiLLC(KingdomofSaudiArabia),InvestmentAnalystforEagleNDBFundManagement(SriLanka)andasaFinancialAnalystforJohnKeellsStockbrokers(SriLanka).HeholdsaBsc(Hons)inEconomicsandBusinessFinancefromBrunelUniversity,UKandisanAssociateMemberoftheCharteredInstituteofManagementAccountants.

VIBATH WIJESINGHEFinancialControllerofCarsonsManagementServices(Private)LimitedthemanagementsupportserviceprovidertotheCarsonCumberbatchGroup.HebeganhiscareeratM/s.KPMG,SriLankaandhasovertenyearsofexperienceinthefieldsoffinance,corporatefinanceandauditing.HejoinedCarsonCumberbatchGroupin2004.HeisanAssociateMemberoftheInstituteofCharteredAccountantsofSriLanka,CharteredInstituteofManagementAccountants(UK)andoftheSocietyofCertifiedManagementAccountantsofSriLanka.HealsoholdsaMastersdegreeinBusinessAdministrationfromPostgraduateInstituteofManagement–UniversityofSriJayewardenepura.

Management Team Profile

SISIRA WICKRAMASINGHESectorAccountantfortheInvestment,RealEstateandLeisuresectors.CommencedcareeratKPMG,CharteredAccountants,priortojoiningCarsonsGroup.Countsoversevenyearsofexperienceinauditing,accountingandfinancialreporting.HeisanAssociateMemberoftheInstituteofCharteredAccountantsofSriLanka.HealsoholdsaB.Sc.Accounting(Special)degreefromtheUniversityofSriJayewardenepura,SriLanka.

ASANKA JAYASEKERAManagerResearch,GuardianFundManagementLtd.Hehasover6yearsofexperienceininvestmentresearch.PriortojoiningtheCarsonCumberbatchGroup,heworkedasafinancialanalystatJBSecuritiesLtd.HeisanassociatememberoftheCharteredInstituteofManagementAccountants(UK)andholdsaB.ScdegreefromtheUniversityofSriJayewardenepuraspecializinginFinance.

LAKMAL WICKRAMAARACHCHIAccountant,GuardianFundManagementLimited.CommencedcareeratKPMG,CharteredAccountants,priortojoiningtheCarsonsGroup.Countsoversixyearsofexperienceinauditingandaccounting.AssociateMemberoftheInstituteofCharteredAccountantsofSriLanka.HoldsaB.Sc.Finance(Special)DegreefromtheUniversityofSriJayewardenepura,SriLanka.


Audit Committee Report

AsprovidedbytheColomboStockExchangeListingRules,theAuditCommitteeofCarsonCumberbatchPLC(CCPLC)-theultimateParentCompanyistheAuditCommitteeoftheCompany.

TheMembersoftheAuditCommitteeareasfollows:

Audit Committee Members


Mr.VijayaMalalasekera(Chairman)

Non-Executive,Independent(CCPLC)

Mr.ChandimaGunawardena

Non-Executive(CCPLC)

Mr.FaizMohideen Non-Executive,Independent(CCPLC)

Mr.VijayaMalalasekeraisaNon-Executive,IndependentDirectorofCCPLCandaformerDirectorofCeylonTobaccoCompanyPLC.

Mr.ChandimaGunawardenaisaNon-ExecutiveDirectorofCCPLCandinmostofitsGroupCompanies.HeisaFellowoftheCharteredInstituteofManagementAccountants,U.K.

Mr.FaizMohideen,aNon-Executive,IndependentDirectorofCCPLC,wastheformerDeputySecretarytotheTreasuryandaformerDirectorofBankofCeylonandSecuritiesandExchangeCommissionofSriLanka.

ThepurposeoftheAuditCommitteeofCCPLCisasfollows:

ToassisttheBoardofDirectorsinfulfillingitsoversightresponsibilitiesforthefinancialreportingprocess,thesystemofinternalcontroloverfinancialreporting,theauditprocessandtheCompany’sprocessformonitoringcompliancewithlawsandregulations,Companypoliciesandproceduresandthecodeofconduct.

Toensurethattheinternalauditactivityiswellmanaged,sothatitaddsvaluetotheorganizationbybeingobjectiveinprovidingrelevantassurance,contributingtotheeffectivenessandefficiencyofgovernance,riskmanagementandcontrolprocesses.

TheauditaspectsofCeylonInvestmentPLCareconductedwithintheAgendaofCCPLC-AuditCommittee.

CCPLC-AuditCommitteeheld05MeetingsduringthefinancialyeartodiscussmattersrelatingtotheCompanyandtheattendanceoftheMembersoftheAuditCommitteewasasfollows:

Meetings attended (out of five)

Mr.VijayaMalalasekera(Chairman) 05

Mr.ChandimaGunawardena 05

Mr.FaizMohideen 05

TheChiefExecutiveOfficer-InvestmentSector,FinancialController-CarsonsManagementServices(Private)Limited-Managers,internalauditorsandseniormanagementstaffmembersalsoattendedtheAuditCommitteeMeetingsbyinvitation.

TheCommitteemettheExternalAuditors,Messrs.KPMGtwiceduringtheyear,i.e.todiscusstheauditscopeandtodeliberatethedraftFinancialReportandAccounts.TheAuditCommitteealsomettheExternalAuditorsanddiscussedthedraftFinancialReportandAccounts,withoutthemanagementbeingpresent.

TheAuditCommitteeapprovedtheauditplanforthefinancialyear2013/2014andtheGroupInternalAudit(GIA)carriedout06detailedauditsontheInvestmentSectorcompanies.

ThefindingsandcontentsoftheGroupInternalAuditreportshavebeendiscussedwiththemanagementandsubsequentlytheauditreportswerecirculatedtotheAuditCommitteeandtothemanagement.

TheobjectivesoftheGIAworkwastohaveanindependentreviewofthesystemofinternalcontrolsasestablishedbythemanagement,itsadequacyandintegrityvis-à-visobjectivesservedandtodeterminetheextentofadherencetothecontrolsbystaffresponsibleforthefunctionandtotakecorrective/preventiveactionwherenecessary.

TheinterimfinancialstatementsofCeylonInvestmentPLChavebeenreviewedbytheAuditCommitteeMembersatAuditCommitteeMeetings.

ThedraftfinancialstatementsofCeylonInvestmentPLCfortheyearended31stMarch2014werereviewedataMeetingoftheAuditCommittee,togetherwiththeExternalAuditors,Messrs.KPMG,priortoreleaseofsametotheRegulatoryAuthoritiesandtotheshareholders.TheAuditCommitteewasprovidedwithconfirmationsanddeclarationsasrequired,bytheManagers,CarsonsManagementServices(Private)LimitedthatthesaidfinancialstatementswerepreparedinaccordancewiththeSriLankaAccountingStandardsandtheinformationrequiredbytheCompaniesActNo.07of2007thereinandpresentedatrueandfairviewoftheCompany’sstateofaffairsasatthatdateandtheCompany’sactivitiesduringtheyearunderreview.

TheInstituteofCharteredAccountantsofSriLankahasissuedthefollowingnewSriLankaAccountingStandardswhichhavebecomeapplicableforthefinancialperiodbeginningonorafter1stJanuary2014/2015.


However,thesestandardshavenotbeenappliedwhenpreparingthecurrentyearfinancialstatements.

• SriLankaAccountingStandards-SLFRS10"Consolidatedfinancialstatements"

• SriLankaAccountingStandards-SLFRS11"JointArrangements"

• SriLankaAccountingStandards-SLFRS12"DisclosureofInterestinOtherEntities"

• SriLankaAccountingStandards-SLFRS13"FairValueMeasurement"

Asexplainedinnote10tothefinancialstatements,themanagementisintheprocessofassessingtheimpact,ifany,onadoptionofthenewstandardswhichhavebecomeeffectivefrom1stApril2014.

TheAuditCommitteehasdeterminedthatMessrs.KPMG,CharteredAccountants,AuditorswereindependentonthebasisthattheydidnotcarryoutanymanagementrelatedfunctionsoftheCompany.

TheAuditCommitteehasconcurredtorecommendtotheBoardofDirectorsthere-appointmentofMessrs.KPMG,CharteredAccountants,asAuditorsforthefinancialyearending31stMarch2015,subjecttotheapprovaloftheshareholdersofCeylonInvestmentPLCattheAnnualGeneralMeeting.

(Sgd.)V.P. MalalasekeraChairman–AuditCommitteeCarson Cumberbatch PLC

Colombo25thJune2014


IndependentAuditors’Report 31

StatementofComprehensiveIncome 32

StatementofFinancialPosition 33

StatementofChangesinEquity 34

StatementofCashFlow 35

NotestotheFinancialStatements 36

FiveYearSummary 66

InformationtoShareholdersandInvestors 74

NoticeofMeeting 76

FormofProxy 77

Financial Information

FINANCIAL CALENDAR

Financialyearend 31stMarch201468thAnnualGeneralMeetingtobeheldon 30thJuly2014

ANNOUNCEMENT OF RESULTSInterimFinancialStatementspublishedintermsoftheListingRulesoftheColomboStockExchange

1stQuarterended30thJune2013 13thAugust2013

2ndQuarterended30thSeptember2013 14thNovember2013

3rdQuarterended31stDecember2013 13thFebruary2014

4thQuarterended31stMarch2014 30thMay2014


TO THE SHAREHOLDERS OF CEYLON INVESTMENT PLC Report on the Financial StatementsWehaveauditedtheaccompanyingfinancialstatementsofCeylonInvestmentPLC(the“Company”),whichcomprisethestatementoffinancialpositionasatMarch31,2014,andthestatementsofcomprehensiveincome,changesinequityandcashflowfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotesassetoutonpages32to65oftheAnnualReport.

Management’s Responsibility for the Financial Statements ManagementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithSriLankaAccountingStandards.Thisresponsibilityincludes:designing,implementingandmaintaininginternalcontrolrelevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror;selectingandapplyingappropriateaccountingpolicies;andmakingaccountingestimatesthatarereasonableinthecircumstances.

Scope of Audit and Basis of OpinionOurresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithSriLankaAuditingStandards.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingpoliciesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.

Wehaveobtainedalltheinformationandexplanationswhichtothebestofourknowledgeandbeliefwerenecessaryforthepurposesofouraudit.Wethereforebelievethatourauditprovidesareasonablebasisforouropinion.

OpinionInouropinion,sofarasappearsfromourexamination,theCompanymaintainedproperaccountingrecordsfortheyearendedMarch31,2014andthefinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheCompanyasatMarch31,2014andofitsfinancialperformanceanditscashflowsfortheyearthenendedinaccordancewithSriLankaAccountingStandards.

Report on Other Legal and Regulatory RequirementsThesefinancialstatementsalsocomplywiththerequirementsofSection151(2)oftheCompaniesActNo.07of2007.

Chartered Accountants

Colombo

25thJune2014

Independent Auditors’ Report


Statement of Comprehensive IncomeInRupeesThousands

For the year ended 31st March Note 2014 2013 (Restated)

Revenue 11 496,779 445,977

Netchangeinfairvalueoffairvaluethroughprofitorlossfinancialassets 303 52,667

Profit on investment activities 497,082 498,644

Administrativeandotheroperatingexpenses (39,531) (26,602)

Profit from operations 12 457,551 472,042

Netfinanceexpense 13 (1,636) (10)

Profit from operations after net finance expenses 455,915 472,032

Shareofprofitofequityaccountedinvesteesnetoftax 14 726,501 728,539

Profit before taxation 1,182,416 1,200,571

Incometaxexpenses 15 (30,059) (18,603)

Profit for the year 1,152,357 1,181,968

Other comprehensive income Shareofothercomprehensiveexpensesofequityaccountedinvesteesnetoftax (816,768) (162,790)

Netchangeinfairvalueofavailableforsalefinancialassets 32,955 273,247

Transferofrealizedgainsonavailableforsalefinancialassets (253,761) (209,511)

Foreigncurrencydifferencesarisingontranslationofavailableforsalefinancialassets 5,488 (2,790)

Total other comprehensive expense for the year (1,032,086) (101,844)

Total comprehensive income for the year 120,271 1,080,124

Earnings per share (Rs.) 16 11.70 12.00

Dividend per share (Rs.)* 17 2.50 1.75

Thenotesfrompages36to65formanintegralpartofthesefinancialstatements.

*Dividendspershareiscalculatedbasedontheproposeddividend/interimdividend.

Figures in brackets indicate deductions.


InRupeesThousands

As at 31st March Note 2014 2013 (Restated)

ASSETS Non-current assets Investmentinequityaccountedinvestees 18 4,738,898 5,024,093 Availableforsalefinancialassets 19 2,520,325 2,210,275 Total non-current assets 7,259,223 7,234,368 Current Assets Tradeandotherreceivables 20 7,027 48,969 Fairvaluethroughprofitorlossfinancialassets 21 644,802 503,630 Cashandcashequivalents 22 809,194 962,421 Total current assets 1,461,023 1,515,020 Total assets 8,720,246 8,749,388

EQUITY AND LIABILITIES Equity Statedcapital 23 673,530 673,530 Capitalreserves 24.1 1,709,133 2,525,901 Revenuereserves 24.2 6,042,709 5,524,358 Total equity 8,425,372 8,723,789 Current Liabilities Tradeandotherpayables 25 276,382 18,437 Currenttaxliabilities 15,795 6,716 Bankoverdraft 2,697 446 Totalcurrentliabilities 294,874 25,599 Total liabilities 294,874 25,599 Total equity and liabilities 8,720,246 8,749,388 Net assets per share - Book value (Rs.) 85.52 88.55 Net assets per share - Market value (Rs.) 117.55 130.74

Thenotesfrompages36to65formanintegralpartofthesefinancialstatements. IcertifythatthesefinancialstatementshavebeenpreparedincompliancewiththerequirementoftheCompaniesAct,No.07of2007.

(Sgd.) V.R.Wijesinghe FinancialController Carsons Management Services (Private) Limited

TheBoardofDirectorsisresponsibleforthepreparationandpresentationofthesefinancialstatements. ApprovedandsignedonbehalfoftheInvestmentManagers, ApprovedandsignedonbehalfoftheBoard,

(Sgd.) (Sgd.) (Sgd.) W. Y. R. Fernando I. Paulraj D.C.R. Gunawardena Director Chairman Director Guardian Fund Management Limited. Colombo 25thJune2014

Statement of Financial Position


Statement of Changes in Equity InRupeesThousands

Stat

ed

capi

tal

Capi

tal r

eser

ves

Reve

nue

rese

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Tota

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Inve

stm

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Asso

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ny’s

capi

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rve

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val

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thro

ugh

profi

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oss

finan

cial

as

sets

re

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Avai

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finan

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as

set

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Reta

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ea

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gs

(Res

tate

d)(R

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ted)

(Res

tate

d)

Balanceasat1

stApril2012

673,530

8,401

178,740

2,501,550

- 7

76,7

65

27,217

3,600,606

7,766,809

Profitfortheyear*

--

--

--

-1,181,968

1,181,968

Othercom

prehensiveincome/

(expense)fortheyear

(162,790)

-60,946

--

(101,844)

Totalcom

prehensiveincome/

(expense)fortheyear

--

-(162,790)

-60,946

-1,181,968

1,080,124

Dividendpaidfor2

011/12

--

--

--

-(123,144)

(123,144)

Transfers

--

--

43,436

--

(43,436)

-

Balanceasat3

1stM

arch2013

673,530

8,401

178,740

2,338,760

43,436

837,711

27,217

4,6

15,9

94

8,723,789

Bala

nce

as a

t 1s

t Ap

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8

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1

78,7

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2,3

38,7

60

43,

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837

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2

7,21

7 4

,615

,994

8

,723

,789

Profi

t fo

r th

e ye

ar *

--

--

--

- 1

,152

,357

1

,152

,357

Othe

r co

mpr

ehen

sive

exp

ense

for

the

year

--

- (

816,

768)

- (

215,

318)

--

(1,

032,

086)

Tota

l com

preh

ensi

ve in

com

e/(e

xpen

se)

for

the

year

--

- (

816,

768)

- (

215,

318)

- 1

,152

,357

1

20,2

71

Divi

dend

pai

d fo

r 20

12/1

3-

--

(41

8,68

8) (

418,

688)

Tran

sfer

s-

--

- (

28,9

10)

28,

910

-

Bala

nce

as a

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st M

arch

201

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73,5

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8,4

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1

4,52

6 6

22,3

93

27,

217

5,3

78,5

73

8,4

25,3

72

*Profitfortheyearincludesshareofprofitoftheassociatecom

panywhichcannotbedistributed.

Thenotesfrom

pages36to65formanintegralpartofthesefinancialstatements.

Rest

atem

ent

of c

ompa

rati

ve fi

gure

sInformationonrestatem

entofcom

parativefiguresisgiveninnote31tothefinancialstatements.

Figu

res

in b

rack

ets

indi

cate

ded

uctio

ns.


InRupeesThousands

Statement of Cash Flow

For the year ended 31st March Note 2014 2013 (Restated)

Cash flows from operating activities Profitbeforetaxation 1,182,416 1,200,571

Adjustments for:

Netchangeinfairvalueoffairvaluethroughprofitorlossfinancialassets (303) (52,667)

Netfinanceexpense 1,636 10

Shareofprofitofequityaccountedinvesteesnetoftax (726,501) (728,539)

Dividendreceivedfromequityaccountedinvestees 18.b 194,928 43,433

Operating profit before working capital changes 652,176 462,808

(Increase)/decreaseintradeandotherreceivables 41,942 (36,380)

Net(increase)/decreaseininvestments (666,237) 73,645

Increase/(decrease)intradeandotherpayables 9,136 (63)

Cash generated from operations 37,017 500,010

Incometaxpaid (20,980) (7,124)

Net cash generated from operating activities 16,037 492,886

Cash flows from financing activities

Financecostpaid (1,636) (10)

Dividendpaid (169,879) (122,295)

Net cash used in financing activities (171,515) (122,305)

Net increase/(decrease) in cash and cash equivalents (155,478) 370,581

Cash and cash equivalents at the beginning of the year 961,975 591,394

Cash and cash equivalents at the end of the year 22 806,497 961,975

Thenotesfrompages36to65formanintegralpartofthesefinancialstatements.

Figures in brackets indicate deductions.


Notes to the Financial Statements

1. Reporting Entity CeylonInvestmentPLCisalimitedliability

companywhichisincorporatedinSriLanka.ThesharesoftheCompanyhaveaprimarylistingontheColomboStockExchange.

TheregisteredofficeandprincipalplaceofbusinessofthecompanyislocatedatNo61JanadhipathiMawatha,Colombo1.

ThefinancialstatementsoftheCompanyasatandfortheyearended31March2014comprisethefinancialinformationofCompanyandthecompany’sinterestinassociatecompany.

TheprincipalactivitiesoftheCompanyistoactasspecialisedinvestmentvehiclestoundertakelistedequityandfixedincomeinvestmentsandtoengageinfundmanagementactivities.

TherewerenosignificantchangesinthenatureoftheprincipalactivitiesoftheCompanyduringthefinancialyearunderreview.

TheCompanyhadnoemployeesasatthereportingdate(2013-Nil).

2. Basis of Preparation Statement of compliance

ThefinancialstatementsoftheCompanycomprisethestatementoffinancialposition,statementofcomprehensiveincome,statementofchangesinequityandcashflowstogetherwiththenotestothefinancialstatements.

ThefinancialstatementshavebeenpreparedinaccordancewithSriLankaAccountingStandards(LKAS/SLFRS)laiddownbytheInstituteofCharteredAccountantsofSriLankaandtherequirementsofCompaniesAct,No.7of2007.

ThefinancialstatementswereauthorisedforissuebytheBoardofDirectorson25thJune2014.

(b) Basis of measurement

Thefinancialstatementshavebeenpreparedonthehistoricalcostbasisandappliedconsistentlywithnoadjustmentsbeingmadeforinflationaryfactorsaffectingthefinancialstatements,exceptforthefollowingmaterialitemsinthestatementoffinancialposition;

• Non-derivativefinancialinstrumentsclassifiedfairvaluethroughprofitorlossaremeasuredatfairvalue;

• Available-for-salefinancialassetsaremeasuredatfairvalue;

ThesefinancialstatementshavebeenpreparedonthebasisthattheCompanywouldcontinueasagoingconcernfortheforeseeablefuture.

(c) Functional and Presentation Currency

Itemsincludedinthefinancialstatementsaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(‘thefunctionalcurrency’).ThefinancialstatementsarepresentedinSriLankanRupees,whichistheCompany’sfunctionalandpresentationcurrency.

(d) Use of estimates and judgments

ThepreparationofthefinancialstatementsinconformitywithLKAS/SLFRSrequiresmanagementtomakejudgments,estimatesandassumptionsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandexpenses.Actualresultsmaydifferfromtheseestimates.

Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.

Informationaboutassumptionsandestimationuncertaintiesthathaveasignificantriskofresultinginamaterialadjustmentwithinthenextfinancialyearareincludedinthefollowingnotes:

Assumptionsandestimationuncertainties:

i. Assessment of Impairment - Key assumptions used in discounted cash flow projections.

TheCompanyassessesateachreportingdatewhetherthereisobjectiveevidencethatanassetorportfolioofassetsisimpaired.Therecoverableamountofanassetisthegreaterofitsvalueinuseanditsfairvaluelesscoststosell.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtopresentvalueusingappropriatediscountratesthatreflectsthecurrentmarketassessmentsofthetimevalueofmoneyandrisksspecifictotheasset.

ii. Current taxation

CurrenttaxliabilitiesarisetotheCompanyinvariousjurisdictions.Theseliabilitiesareprovidedforinthefinancialstatementsapplyingtherelevanttaxstatutesandregulationswhichthemanagementbelievesreflecttheactualliability.TherecanbeinstanceswherethestandtakenbytheCompanyontransactionsiscontestedbyrevenueauthorities.Anyadditionalcostsonaccountoftheseissuesareaccountedforasataxexpenseatthepointtheliabilityisconfirmedontheentity.


Materiality and aggregation

EachmaterialclassofsimilaritemsispresentedinaggregateintheFinancialStatements.Itemsofdissimilarnatureorfunctionarepresentedseparatelyunlesstheyareimmaterial.

3. Significant Accounting Policies

TheAccountingPoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresentedintheFinancialStatementsoftheCompanyunlessotherwiseindicated.

(i) Investments in associates (equity-accounted investees)

AssociatesarethoseentitiesinwhichtheCompanyhassignificantinfluence,butnotcontrolorjointcontrol,overthefinancialandoperatingpolicies.SignificantinfluenceispresumedtoexistwhentheCompanyholdsbetween20percentand50percentofthevotingpowerofanotherentity.

Investmentsinassociatesareaccountedforundertheequitymethodandarerecognisedinitiallyatcost.Thecostoftheinvestmentincludestransactioncosts.

ThefinancialstatementsincludetheCompany’sshareoftheprofitorlossandothercomprehensiveincomeofequity-accountedinvestees,afteradjustmentstoaligntheaccountingpolicieswiththoseoftheCompany,fromthedatethatsignificantinfluencecommencesuntilthedatethatsignificantinfluenceceases.

WhentheCompany’sshareoflossesexceedsitsinterestinanequity-accountedinvestee,thecarryingamountoftheinvestment,includinganylong-termintereststhatformpartthereof,isreducedtozero,andtherecognition

offurtherlossesisdiscontinuedexcepttotheextentthattheCompanyhasanobligationorhasmadepaymentsonbehalfoftheinvestee.

(a) Foreign currency

(i) Foreign currency transactions

Transactionsinforeigncurrenciesaretranslatedtotherespectivefunctionalcurrenciesofentityatexchangeratesasatthedatesofthetransactions.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesatthereportingdateareretranslatedtothefunctionalcurrencyattheexchangerateasatthatdate.

Theforeigncurrencygainorlossonmonetaryitemsisthedifferencebetweenamortisedcostinthefunctionalcurrencyatthebeginningoftheyear,adjustedforeffectiveinterestandpaymentsduringtheyear,andtheamortisedcostinforeigncurrencytranslatedattheexchangerateattheendoftheyear.

Non-monetaryassetsandliabilitiesthataremeasuredatfairvalueinaforeigncurrencyareretranslatedtothefunctionalcurrencyattheexchangerateatthedatethatthefairvaluewasdetermined.Non-monetaryitemsthataremeasuredbasedonhistoricalcostinaforeigncurrencyaretranslatedusingtheexchangerateatthedateofthetransaction.

Foreigncurrencydifferencesarisingonretranslationaregenerallyrecognisedinprofitorloss.However,foreigncurrencydifferencesarisingfromtheretranslationofthefollowingitemsarerecognisedinothercomprehensiveincome:

• available-for-saleequityinvestments(exceptonimpairmentinwhichcaseforeigncurrencydifferencesthathavebeenrecognisedinothercomprehensiveincomearereclassifiedtoprofitorloss);

(b) Financial instruments

(i) Non-derivative financial assets

TheCompanyinitiallyrecognisesloansandreceivablesonthedatethattheyareoriginated.Allotherfinancialassets(includingassetsdesignatedasatfairvaluethroughprofitorloss)arerecognisedinitiallyonthetradedate,whichisthedatethattheCompanybecomesapartytothecontractualprovisionsoftheinstrument.

TheCompanyderecognisesafinancialassetwhenthecontractualrightstothecashflowsfromtheassetexpire,orittransferstherightstoreceivethecontractualcashflowsinatransactioninwhichsubstantiallyalltherisksandrewardsofownershipofthefinancialassetaretransferred.AnyinterestinsuchtransferredfinancialassetsthatiscreatedorretainedbytheCompanyisrecognisedasaseparateassetorliability.

Financialassetsandliabilitiesareoffsetandthenetamountpresentedinthestatementoffinancialpositionwhen,andonlywhen,theCompanyhasalegalrighttooffsettheamountsandintendseithertosettlethemonanetbasisortorealizetheassetandsettletheliabilitysimultaneously.

TheCompanyclassifiesnon-derivativefinancialassetsintothefollowingcategories;financialassetsatfairvaluethroughprofitorloss,loansandreceivablesandavailable-for-salefinancialassets.

Financial assets at fair value through profit or loss

Afinancialassetisclassifiedasatfairvaluethroughprofitorloss(FVTPL)orisdesignatedassuchoninitialrecognition.Financialassetsaredesignatedasatfairvaluethroughprofitorlossifthe


CompanymanagessuchinvestmentsandmakespurchaseandsaledecisionsbasedontheirfairvalueinaccordancewiththeCompany’sdocumentedriskmanagementorinvestmentstrategy.Attributabletransactioncostsarerecognisedinprofitorlossasincurred.Financialassetsatfairvaluethroughprofitorlossaremeasuredatfairvalueandchangestherein,whichtakesintoaccountanydividendincome,arerecognisedinprofitorloss.

FinancialassetsclassifiedasFVTPLcompriseshort-termsovereigndebtsecuritiesactivelymanagedbytheCompany’streasurydepartmenttoaddressshort-termliquidityneeds.

Financialassetsdesignatedasfairvaluesthroughprofitorlosscompriseequitysecuritiesthatotherwisewouldhavebeenclassifiedasavailable-for-sale.

Loans and receivables

Loansandreceivablesarefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Suchassetsarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethod,lessanyimpairmentlosses.

Loansandreceivablescomprisecashandcashequivalents,andtradeandotherreceivables.

Specific instruments

Cash and cash equivalents

Cashandcashequivalentscomprisecashbalancesandcalldepositswithmaturitiesofthreemonthsorlessfromtheacquisitiondatethataresubjecttoaninsignificantriskofchangesintheirfairvalue,andareusedbytheCompany

inthemanagementofitsshort-termcommitments.

Investment in reverse repurchase agreement

Thecompanypurchasesafinancialassetandsimultaneouslyenterintoanagreementtoresellthesameorasubstantiallysimilarassetatafixedpriceonafuturedate.Thearrangementisaccountedforasaloanandreceivables.

Available-for-sale financial assets

Available-for-salefinancialassetsarenon-derivativefinancialassetsthataredesignatedasavailable-for-saleorarenotclassifiedinanyoftheabovecategoriesoffinancialassets.Available-for-salefinancialassetsarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.

Subsequenttoinitialrecognition,theyaremeasuredatfairvalueandchangestherein,otherthanimpairmentlossesandforeigncurrencydifferencesonavailable-for-saledebtinstruments,arerecognisedinothercomprehensiveincomeandpresentedinthefairvaluereserveinequity.Whenaninvestmentisderecognised,thegainorlossaccumulatedinequityisreclassifiedtoprofitorloss.

Available-for-salefinancialassetscompriseequitysecuritiesanddebtsecurities.

(ii) Non-derivative financial liabilities

TheCompanyinitiallyrecognisesdebtsecuritiesissuedandsubordinatedliabilitiesonthedatethattheyareoriginated.Allotherfinancialliabilitiesarerecognisedinitiallyonthetradedate,whichisthedatethattheCompanybecomesapartytothecontractualprovisionsoftheinstrument.

TheCompanyderecognisesafinancialliabilitywhenitscontractualobligationsaredischarged,cancelledorexpire.

TheCompanyclassifiesnon-derivativefinancialliabilitiesintotheotherfinancialliabilitiescategory.Suchfinancialliabilitiesarerecognisedinitiallyatfairvaluelessanydirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,thesefinancialliabilitiesaremeasuredatamortisedcostusingtheeffectiveinterestmethod.

Otherfinancialliabilitiescompriseoverdraftsandtradeandotherpayables.

BankoverdraftsthatarerepayableondemandandformanintegralpartoftheCompany’scashmanagementareincludedasacomponentofcashandcashequivalentsforthestatementofcashflows.

(iii) Stated capital

Ordinary shares

Ordinarysharesareclassifiedasequity.Costsattributabletotheissueofordinarysharesarerecognisedasanexpense.

(c) Impairment

(i) Non derivative financial assets

Afinancialassetnotclassifiedasatfairvaluethroughprofitorloss,includinganinterestinanequity-accountedinvestee,isassessedateachreportingdatetodeterminewhetherthereisobjectiveevidencethatitisimpaired.Afinancialassetisimpairedifthereisobjectiveevidenceofimpairmentasaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionoftheasset,andthatlossevent(s)hadanimpactontheestimatedfuturecashflowsofthatassetthatcanbeestimatedreliably.



Objectiveevidencethatfinancialassetsareimpairedincludesdefaultordelinquencybyadebtor,restructuringofanamountduetotheCompanyontermsthattheCompanywouldnotconsiderotherwise,indicationsthatadebtororissuerwillenterbankruptcy,adversechangesinthepaymentstatusofborrowersorissuers,economicconditionsthatcorrelatewithdefaultsorthedisappearanceofanactivemarketforasecurity.Inaddition,foraninvestmentinanequitysecurity,asignificantorprolongeddeclineinitsfairvaluebelowitscostisobjectiveevidenceofimpairment.TheCompanyconsidersadeclineof20percenttobesignificantandaperiodof9monthstobeprolonged.

Financial assets measured at amortised cost

TheCompanyconsidersevidenceofimpairmentforfinancialassetsmeasuredatamortisedcost(loansandreceivablesandheld-to-maturityfinancialassets)atbothaspecificassetandcollectivelevel.Allindividuallysignificantassetsareassessedforspecificimpairment.Thosefoundnottobespecificallyimpairedarethencollectivelyassessedforanyimpairmentthathasbeenincurredbutnotyetidentified.Assetsthatarenotindividuallysignificantarecollectivelyassessedforimpairmentbygroupingtogetherassetswithsimilarriskcharacteristics.

Inassessingcollectiveimpairment,theCompanyuseshistoricaltrendsoftheprobabilityofdefault,thetimingofrecoveriesandtheamountoflossincurred,adjustedformanagement’sjudgementastowhethercurrenteconomicandcreditconditionsaresuchthattheactuallossesarelikelytobegreaterorlesserthansuggestedbyhistoricaltrends.

Animpairmentlossinrespectofafinancialassetmeasuredatamortisedcostiscalculatedasthedifferencebetweenitscarryingamountandthepresentvalueoftheestimatedfuturecashflowsdiscountedattheasset’soriginaleffectiveinterestrate.Lossesarerecognisedinprofitorlossandreflectedinanallowanceaccountagainstloansandreceivables.Interestontheimpairedassetcontinuestoberecognised.Whenaneventoccurringaftertheimpairmentwasrecognisedcausestheamountofimpairmentlosstodecrease,thedecreaseinimpairmentlossisreversedthroughprofitorloss.

Available-for-sale financial assets

Impairmentlossesonavailable-for-salefinancialassetsarerecognisedbyreclassifyingthelossesaccumulatedinthefairvaluereserveinequitytoprofitorloss.Thecumulativelossthatisreclassifiedfromequitytoprofitorlossisthedifferencebetweentheacquisitioncost,netofanyprincipalrepaymentandamortisation,andthecurrentfairvalue,lessanyimpairmentlossrecognisedpreviouslyinprofitorloss.Changesincumulativeimpairmentlossesattributabletoapplicationoftheeffectiveinterestmethodarereflectedasacomponentofinterestincome.

If,inasubsequentperiod,thefairvalueofanimpairedavailable-for-saledebtsecurityincreasesandtheincreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentlosswasrecognised,thentheimpairmentlossisreversed,withtheamountofthereversalrecognisedinprofitorloss.However,anysubsequentrecoveryinthefairvalueofanimpairedavailable-for-saleequitysecurityisrecognisedinothercomprehensiveincome.

Animpairmentlossinrespectofanequity-accountedinvesteeismeasuredbycomparingtherecoverableamountoftheinvestmentwithitscarryingamount.

Animpairmentlossisrecognisedinprofitorloss.Animpairmentlossisreversediftherehasbeenafavourablechangeintheestimatesusedtodeterminetherecoverableamount.

(ii) Non-financial assets

ThecarryingamountsoftheCompany’snon-financialassetsarereviewedateachreportingdatetodeterminewhetherthereisanyindicationofimpairment.Ifanysuchindicationexists,thentheasset’srecoverableamountisestimated

Impairmentlossesarerecognisedinprofitorloss.

Animpairmentlossisreversedonlytotheextentthattheasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortisation,ifnoimpairmentlosshadbeenrecognised.

(d) Provisions

Aprovisionisrecognisedif,asaresultofapastevent,theCompanyhasapresentlegalorconstructiveobligationthatcanbeestimatedreliably,anditisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Provisionsaredeterminedbydiscountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheliability.Theunwindingofthediscountisrecognisedasfinancecost.


(i) Contingent liabilities and contingent assets

Acontingentliabilityisapossibleobligationthatarisesfrompasteventswhoseexistencewillbeconfirmedbytheoccurrenceornon-occurrenceofoneormoreuncertainfutureeventsbeyondthecontroloftheCompanyorapresentobligationthatisnotrecognizedbecauseitisnotprobablethatanoutflowofresourceswillberequiredtosettletheobligation.

Acontingentliabilityalsoarisesinextremelyrarecaseswherethereisaliabilitythatcannotberecognizedbecauseitcannotbemeasuredreliably.TheCompanydoesnotrecognizeacontingentliabilitybutdisclosesitsexistenceinthefinancialstatements.

Acontingentassetisapossibleassetthatarisesfrompasteventswhoseexistencewillbeconfirmedbytheoccurrenceornon-occurrenceofoneormoreuncertainfutureeventsbeyondthecontroloftheCompany.TheCompanydoesnotrecognizecontingentassetsbutdisclosesitsexistencewhereinflowsofeconomicbenefitsareprobable,butnotvirtuallycertain.

(e) Revenue

RevenueisrecognizedtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheCompany,andtherevenueandassociatedcostsincurredortobeincurredcanbereliablymeasured.Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable,netoftradediscountsandsalestaxes.

Thefollowingspecificcriteriaareusedforthepurposeofrecognitionofrevenue;

(i) Dividend Income

DividendincomeisrecognisedinprofitorlossonthedatethattheCompany’srighttoreceivepaymentisestablished,whichinthecaseofquotedsecuritiesisnormallytheex-dividenddate.

(ii) Gain on disposal of financial assets (categorized as available for sale / fair value through profit or loss)

ProfitsorlossesondisposalofinvestmentsareaccountedforintheStatementofIncomeonthebasisofrealizednetprofit.

(iii) Interest income

Interestincomecomprisestheamountsearnedonfundsinvested(includingavailable-for-salefinancialassets),andisrecognisedasitaccruesinprofitorloss,usingtheeffectiveinterestmethod.

(iv) Other income

Onaccrualbasis.

(f) Expenditure Recognition

(i) Operating Expenses

Allexpensesincurredinday-to-dayoperationsofthebusinessandinmaintainingtheproperty,plant&equipmentinastateofefficiencyhasbeenchargedtorevenueinarrivingattheprofitorlossfortheyear.Provisionhasalsobeenmadeforbadanddoubtfuldebts,allknownliabilitiesanddepreciationonproperty,plant&equipment.

(ii) Finance income and finance costs

Financecostscompriseinterestexpenseonborrowings,unwindingofthediscountonprovisionsanddeferredconsideration,dividendsonpreferencesharesclassifiedasliabilities,contingentconsideration,lossesonhedginginstrumentsthat

arerecognisedinprofitorlossandreclassificationsofnetlossespreviouslyrecognisedinothercomprehensiveincome.

Borrowingcoststhatarenotdirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarerecognisedinprofitorlossusingtheeffectiveinterestmethod.

Foreigncurrencygainsandlossesonfinancialassetsandfinancialliabilitiesarereportedonanetbasisaseitherfinanceincomeorfinancecostdependingonwhetherforeigncurrencymovementsareinanetgainornetlossposition.

(g) Fee and commission expenses

Feeandcommissionexpensesarerecognizedinprofitorlosswhentherelatedservicesareperformed.

(h) Income tax expense

IncomeTaxexpensecomprisescurrenttaxanddefferedtax.Currenttaxisrecognisedinprofitorothercomprehensiveincome.

(i) Current taxation

Currenttaxistheexpectedtaxpayableorreceivableonthetaxableincomeorlossfortheyear,usingtaxratesenactedorsubstantivelyenactedatthereportingdate,andanyadjustmenttotaxpayableinrespectofpreviousyears.Currenttaxpayablealsoincludesanytaxliabilityarisingfromthedeclarationofdividends.

(ii) Tax exposures

Indeterminingtheamountofcurrentanddeferredtax,theCompanytakesintoaccounttheimpactofuncertaintaxpositionsandwhetheradditionaltaxesandinterestmaybedue.Thisassessmentreliesonestimatesandassumptions



andmayinvolveaseriesofjudgementsaboutfutureevents.NewinformationmaybecomeavailablethatcausestheCompanytochangeitsjudgementregardingtheadequacyofexistingtaxliabilities;suchchangestotaxliabilitieswillimpacttaxexpenseintheperiodthatsuchadeterminationismade.

(iii) Economic Service Charge (ESC)

AspertheprovisionsofEconomicServiceChargeActNo.13of2006andamendmentsthereto,ispayableon“LiableTurnover”andisdeductiblefromtheincometaxpayments.AnyunclaimedESCcanbecarriedforwardandsettledagainsttheincometaxpayableinthefoursubsequentyears.

4. Earnings per share TheCompanypresentsbasicearningsper

share(EPS)dataforitsordinaryshares.BasicEPSiscalculatedbydividingtheprofitorlossattributabletoordinaryshareholdersoftheCompanybytheweightedaveragenumberofordinarysharesoutstandingduringtheperiod.

5. Related party transactions Disclosurehasbeenmadeinrespect

ofthetransactionsinwhichonepartyhastheabilitytocontrolorexercisesignificantinfluenceoverthefinancialandoperatingpoliciesdecisionsoftheother,irrespectiveofwhetherapriceischarged.

6. Events after the Reporting Period

AllmaterialandimportanteventswhichoccurafterthereportingdatehavebeenconsideredanddisclosedinNote26.

7. Dividends on ordinary Shares Dividendsonordinarysharesare

recognizedasaliabilityanddeducted

fromequitywhentheyareapprovedbytheCompany’sshareholders.InterimdividendsaredeductedfromequitywhentheyaredeclaredandarenolongeratthediscretionoftheCompany.

8. Presentation Assetsandliabilitiesaregroupedby

natureandlistedinanorderthatreflectstheirrelativeliquidityandmaturitypattern.

Whereappropriate,thesignificantaccountingpoliciesaredisclosedinthesucceedingNotes.

(i) Off setting Income and Expenses

Incomeandexpensesarenotoffsetunlessrequiredorpermittedbyaccountingstandards.

(ii) Off setting Assets and Liabilities

Assetsandliabilitiesareoffsetandthenetamountreportedinthestatementoffinancialpositiononlywherethereis;

• acurrentenforceablelegalrighttooffsettheassetandtheliability;and

• anintentiontosettletheliabilitysimultaneously

9. Determination of Fair Values Anumberofthecompany’saccounting

policiesanddisclosuresrequirethedeterminationoffairvalue,forbothfinancialandnon-financialassetsandliabilities.Fairvalueshavebeendeterminedformeasurementand/ordisclosurepurposesbasedonthefollowingmethods.Whereapplicable,furtherinformationabouttheassumptionsmadeindeterminingfairvaluesisdisclosedinthenotesspecifictothatassetorliability.

Whenmeasuringthefairvalueofanassetoraliability,theCompanyusesmarketobservabledataasfaraspossible.Fairvaluesarecategorizedintodifferentlevelsinafairvaluehierarchybasedontheinputsusedinthevaluationtechniquesasfollows;

• Level1-Inputthatarequotedmarketprices(unadjusted)inactivemarketsforidentifiableassetsandliabilities

• Level2-InputsotherthanquotedpricesincludedinLevel1thatareobservablefromtheassetorliabilityeitherdirectly(asprices)orindirectly(derivedprices)

• Level3–Inputsfromtheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs)Thiscategoryincludesallfinancialinstrumentsforwhichthevaluationtechniquesincludeinputsnotbasedonobservabledataandunobservableinputshavesignificanteffectontheinstrument’svaluation.

Iftheinputsusedtomeasurethefairvalueofanassetoraliabilitymightbecategorizedindifferentlevelsofthefairvaluehierarchy,thenthefairvaluemeasurementiscategorizedinitsentiretyinthesamelevelofthefairvaluehierarchyasthelowestlevelinputthatissignificanttotheentiremeasurement.

(a) Equity and debt securities

Thefairvaluesofinvestmentsinequityanddebtsecuritiesaredeterminedwithreferencetotheirquotedclosingbidpriceatthemeasurementdate,orifunquoted,determinedusingavaluationtechnique.Valuationtechniquesemployedincludemarketmultiplesanddiscountedcashflowanalysisusingexpectedfuturecashflowsandamarket-relateddiscountrate.


Subsequenttoinitialrecognition,thefairvaluesofheld-to-maturityinvestmentsaredeterminedfordisclosurepurposesonly.

(b) Trade and other receivables

Thefairvaluesoftradeandotherreceivablesareestimatedatthepresentvalueoffuturecashflows,discountedatthemarketrateofinterestatthemeasurementdate.Short-termreceivableswithnostatedinterestratearemeasuredattheoriginalinvoiceamountiftheeffectofdiscountingisimmaterial.Fairvalueisdeterminedatinitialrecognitionand,fordisclosurepurposes,ateachannualreportingdate.

(c) Other non-derivative financial liabilities

Othernon-derivativefinancialliabilitiesaremeasuredatfairvalue,atinitialrecognitionandfordisclosurepurposes,ateachannualreportingdate.

Directors’ responsibility

TheBoardofDirectorsisresponsibleforthepreparationandpresentationoftheFinancialStatements.ThisismorefullydescribedundertherelevantclauseintheDirectors’Report.

10. New Accounting Standards issued but not effective as at reporting date

TheInstituteofCharteredAccountantsofSriLankahasissuedthefollowingnewSriLankaAccountingStandardswhichhavebecomeapplicableforfinancialperiodsbeginningonorafter1stJanuary2014.

Accordingly,theseStandardshavenotbeenappliedinpreparingthesefinancialstatements.

• SriLankaAccountingStandards–SLFRS10“Consolidatedfinancialstatements”

TheobjectiveofthisSLFRSistoestablishprinciplesforthepresentationandpreparationofconsolidatedfinancialstatementswhenanentitycontrolsoneormoreotherentities.

Aninvestorisexpectedtocontrolaninvesteeifandonlyiftheinvestorhasallthefollowing;

(a)powerovertheinvestee;

(b)exposure,orrights,tovariablereturnsfromitsinvolvementwiththeinvestee;and

(c) Theabilitytouseitspowerovertheinvesteetoaffecttheamountoftheinvestor’sreturns

AdoptionofthisstandardsisnotexpectedtohaveanydirectimpactontheCompany.however,theremaybeanindirectimpactviaparentcompaniesgroupstructure.

TheCompanyisintheprocessofassessingtheindirectimpact.

SLFRS10hasbecomeeffectivefrom1April2014

• SriLankaAccountingStandards–SLFRS11“JointArrangements”

TheobjectiveofthisSLFRSistoestablishprinciplesforfinancialreportingbyentitiesthathaveaninterestinarrangementsthatarecontrolledjointly(iejointarrangements).

SLFRS11hasbecomeeffectivefrom1April2014.However,thisstandardwillnotbeapplicabletotheCompany,unlessthereisachangetothestructure.


• SriLankaAccountingStandard-SLFRS12”DisclosureofInterestsinOtherEntities”

TheobjectiveofthisSLFRSistorequireanentitytodiscloseinformationthatenablesusersofitsFinancialStatementstoevaluatethenatureof,andrisksassociatedwithitsinterestsinotherentitiesofthoseinterestsinotherentities;andtheeffectofthoseinterestsonitsfinancialposition,financialperformanceandcashflows.

SLFRS12hasbecomeeffectivefrom1April2014.

• SriLankaAccountingStandard-SLFRS13,“FairValueMeasurement”

ThisSLFRSdefinesfairvalue,setsoutinasingleSLFRSaframeworkformeasuringfairvalue;andrequiresdisclosuresaboutfairvaluemeasurements.

ThisSLFRShasbecomeeffectivefortheGroupfrom1April2014.

• SriLankaAccountingStandard–SLFRS9“FinancialInstruments”

TheobjectiveofthisSLFRSistoestablishprinciplesforthefinancialreportingoffinancialassetsandfinancialliabilitiesthatwillpresentrelevantandusefulinformationtousersoffinancialstatementsfortheirassessmentoftheamounts,timinganduncertaintyofanentity’sfuturecashflows.

AnentityshallapplythisSLFRStoallitemswithinthescopeofLKAS39FinancialInstruments:RecognitionandMeasurement.

Theeffectivedateofthisstandardhasbeendeferred.


11. Revenue For the year ended 31st March 2014 2013 Netgainfromdisposaloffairvaluethroughprofitorlossfinancialassets 19,603 10,661

Netgainfromdisposalofavailableforsalefinancialassets(note11.1) 304,297 271,978

Dividendincome 252,761 134,591

Interestincome 115,046 72,180

691,707 489,410

Dividendreceivedfromequityaccountedinvestees (194,928) (43,433)

496,779 445,977

11.1. Net gain from disposal of available for sale financial assets Proceedsfromdisposalofavailableforsalefinancialassets 661,555 615,431

Carryingvalueofavailableforsalefinancialassetsdisposed (611,019) (552,964)

Transferofrealizedgainsonavailableforsalefinancialassets 253,761 209,511

304,297 271,978

12. Profit from operations Profitfromoperationsisstatedafterchargingallexpensesincludingthefollowingexpenses:

Directors’fees 2,100 2,100

Supportservicefees 9,341 5,387

Auditors’remunerationandexpenses

-Auditfees 307 275

-Auditrelatedfees 65 63

-Non-auditfees - 187

13. Net finance expense Interestondebtsandborrowings 1,629 -

Exchangelosses 7 10

Net finance expense 1,636 10



14. Share of profit of equity accounted investees net of tax Revenue Net profit for the year Company share of profit net of tax

For the year ended 31st March 2014 2013 2014 2013 2014 2013

RubberInvestmentTrustLimited 925,618 663,376 1,471,848 1,477,853 726,501 728,539

925,618 663,376 1,471,848 1,477,853 726,501 728,539

15. Income tax expense For the year ended 31st March 2014 2013

Provisionfortheyear(note15.1) 30,098 18,606

Overprovisionforpreviousyears (39) (3)

30,059 18,603

15.1. Reconciliation of accounting profit and taxable profits For the year ended 31st March 2014 2013

Profitbeforetaxation 1,182,416 1,200,571

Less:shareofprofitofequityaccountedinvestees (726,501) (728,539)

Dividendincome(excludingdividendreceivedfromassociatecompany) (57,833) (91,158)

Exemptnetprofitonsaleofquotedpublicshares (323,900) (282,639)

Netchangeinfairvalueoffairvaluethroughprofitorlossfinancialassets(note21B) (303) (52,667)

Disallowableexpenses 2,945 650

Expensesattributabletoexemptprofits 30,671 20,233

Adjusted profit for tax purposes 107,495 66,451

Less:Utilizationofbroughtforwardtaxlosses(Note15.2(iii)) - -

Taxable income 107,495 66,451

Income tax charged thereon

Incometaxexpensefortheyear(Note15.2(i)) 30,098 18,606

InRupeesThousands


15.2. Current taxation on profitsi) InaccordancewiththeprovisionsoftheInlandRevenueAct,No.10of2006andamendmentsthereto,theCompanyisliabletoincometaxat28%

(2013-28%).

ii) IntermsofSection13(t)ofInlandRevenueAct,No.10of2006andamendmentsthereto,profitsderivedonthesaleofsharesonwhichShareTransactionLevy(STL)hasbeenpaidisexemptfromincometax.

iii) Utilizationofbroughtforwardtaxlossesisrestrictedto35%ofcurrentyear’sStatutoryIncome.Unabsorbedtaxlossescanbecarriedforwardindefinitely.

16. Earnings per share TheCompany'sbasicearningspershareiscalculatedontheprofitattributabletotheshareholdersofCeylonInvestmentPLCovertheweighted

averagenumberofordinarysharesoutstandingduringtheyear,asrequiredbySriLankaAccountingStandard(LKAS33)-"Earningspershare".

Thefollowingreflectstheearningandsharedatausedforthecomputationofearningspershare:

For the year ended 31st March 2014 2013

Amount used as the numerator Profitfortheyear 1,152,357 1,181,968 Amount used as denominator Weightedaveragenumberofordinarysharesoutstandingduringtheyear 98,514,874 98,514,874 Earnings per share ( Rs.) 11.70 12.00

17. Dividend For the year ended 31st March 2014 2013

Dividend paid Firstandfinaldividend 172,401 123,144

Proposed/interim dividend

Interim/finaldividend 246,287 172,401

Dividendpershare 2.50 1.75



18. Investment in equity accounted investees18.a. Investment in equity accounted investees (unquoted) No. of Cost Fair value No. of Cost Fair value shares as at as at shares as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

RubberInvestmentTrustLimited 3,948,445 296 7,893,941 3,948,445 296 9,179,749

Total Investment in equity accounted investees 3,948,445 296 7,893,941 3,948,445 296 9,179,749

18.b. Movements in investment in equity accounted investees Holding Carrying Value Fair value Holding Carrying value Fair value % as at as at % as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

Investors’ share of net assets Atthebeginningoftheyear 49.95 5,023,797 - 49.95 4,501,481 -

Shareofprofitofequityaccountedinvesteesnetoftax 726,501 - 728,539 -

Shareofothercomprehensiveexpensesofequity accountedinvesteesnetoftax (816,768) - (162,790) -

Dividendincome (194,928) - (43,433) -

At the end of the year 4,738,602 - 5,023,797 -

Total investment in equity accounted investees on equity method (18.a and 18.b) 4,738,898 7,893,941 5,024,093 9,179,749

ThefairvaluationofRubberInvestmentTrustLimited(RITL)isbasedonthenetassetvalueofRITLafteradjustingforthefairvalueofitsinvestmentportfolio.

18.c. Summarized financial information of associate Total assets Total liabilities As at 31st March 2014 2013 2014 2013

RubberInvestmentTrustLimited 9,669,427 10,204,781 40,978 4,817

9,669,427 10,204,781 40,978 4,817

InRupeesThousands


19. Available for sale financial assets19.a. Summary Note Cost Fair value Cost Fair value as at as at as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

Investments in equity securities Quoted 19.1 1,862,382 2,333,412 1,213,614 1,834,874

Unquoted 19.2 973 973 543 543

Privateequity 19.3 - - 133,877 191,031

Totalinvestmentsinequitysecurities 1,863,355 2,334,385 1,348,034 2,026,448

Investments in unit trusts Unlisted 19.4 162,280 185,939 162,280 183,826

Totalinvestmentsinunittrusts 162,280 185,939 162,280 183,826

Investments in debentures Unquoted 19.5 1 1 1 1

Totalinvestmentsindebentures 1 1 1 1

Total investment in available for sale financial assets 2,025,636 2,520,325 1,510,315 2,210,275

Note - ThefairvalueoftheCompany’slistedequityportfolioisbasedonthevolumeweightedaveragepriceasat31stMarch,publishedbytheColombo

StockExchange.

- Thefairvalueofinvestmentinunittrustsarebasedon"netassetsvalues"publishedbythecustodianbankandthemanagementcompanyasat31stMarch.

- Thefairvalueofinvestmentinprivateequityarearrivedatbasedonvaluationtechniquessuchasforecastedcashflowprojections,netassetvaluation,earningsbasedvaluationorexpectedrealizablevaluesinanarm’slengthtransactionasappropriate.


19.b. Movement in available for sale financial Assets As at Additions Disposals Change in As at 1st April fair value 31st March 2013 2014

Investments in equity securities 2,026,448 882,626 (611,019) 36,330 2,334,385

Investments in unit trusts 183,826 - - 2,113 185,939

Investments in debentures 1 - - - 1

2,210,275 882,626 (611,019) 38,443 2,520,325

As at Additions Disposals Change in As at 1st April fair value 31st March 2012 2013

Investmentsinequitysecurities 2,053,416 275,240 (552,964) 250,756 2,026,448

Investmentsinunittrusts 164,125 - - 19,701 183,826

Investmentsindebentures 1 - - - 1

2,217,542 275,240 (552,964) 270,457 2,210,275

Thechangeinfairvaluerepresentsthenetunrealizedgains/(losses)onfairvalueadjustmentofinvestmentportfoliosincludinganyadjustmentonimpairmentlosses.

Sincethereisnosignificant/prolongeddeclineinfairvalueofinvestmentinequitysecuritiesbelowitscost,noimpairmentlosshasbeenrecognisedinthestatementofcomprehensiveincomefortheyear(2013–Nil)asrequiredbyLKAS–39“FinancialInstruments;recognitionandmeasurement”.LKAS–39alsorequirestorecognisefairvaluegainsandlossesarisingfromassetsclassifiedasavailableforsale,otherthanimpairmentlosses,inothercomprehensiveincome.Accordingly,gainsofRs.32.9mnandRs.273.2mnhavebeenrecognisedinfinancialyears2014and2013respectively.


InRupeesThousands


19.1. Investments in equity securities - quoted No. of Cost Fair value No. of Cost Fair value shares as at as at shares as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

Banks, Finance & Insurance CentralFinanceCompanyPLC 915,969 162,580 165,790 668,698 116,679 120,366

CommercialBankofCeylonPLC 4,751,486 314,705 584,432 6,682,396 442,595 755,111

SampathBankPLC 1,478,367 342,450 269,211 707,023 210,325 159,009

NationsTrustBankPLC 2,542,368 155,330 165,000 - - -

Peoples’Leasing&FinancePLC 7,902,045 138,946 112,999 6,954,891 125,188 91,109

1,114,011 1,297,432 894,787 1,125,595

Diversified AitkenSpencePLC 1,674,000 168,425 163,885 - - -

JohnKeellsHoldingsPLC 1,366,896 82,277 310,285 1,610,641 68,500 397,828

JohnKeellsHoldingsPLC-Warrants2015 82,600 - 5,666 - - -

JohnKeellsHoldingsPLC-Warrants2016 82,600 - 5,939 - - -

HemasHoldingsPLC 802,116 27,069 30,240 - - -

277,771 516,015 68,500 397,828

Health Care AsiriSurgicalHospitalsPLC - - - 7,465,290 75,951 85,104

CeylonHospitalsPLC 813,378 45,742 93,538 813,378 45,742 81,338

45,742 93,538 121,693 166,442

Hotels & Travels AitkenSpenceHotelHoldingsPLC 1,959,575 128,634 137,170 1,959,575 128,634 145,009

128,634 137,170 128,634 145,009

Telecommunication DialogAxiataPLC 28,629,514 264,781 257,666 - - -

264,781 257,666 - -

Motors Diesel&MotorEngineeringPLC 62,556 31,443 31,591 - - -

31,443 31,591 - -

Totalinvestmentsinequitysecurities-Quoted 1,862,382 2,333,412 1,213,614 1,834,874

ThefairvalueoftheCompany’sinvestmentportfolioisbasedonVolumeWeightedAveragepriceasat31stMarch,publishedbytheColomboStockExchange.


19. Available for sale financial assets (contd.)19.2. Investments in equity securities - unquoted No. of Cost Fair value No. of Cost Fair value shares as at as at shares as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

GuardianFundManagementLimited 7 - - 7 - -

KandyPrivateHospitalsLimited 600 10 10 600 10 10

DFCCVardhanaBank 55,253 963 963 42,975 533 533

Totalinvestmentsinequitysecurities-Unquoted 973 973 543 543

19.3. Investments in equity securities - Private equity (unlisted) No. of Cost Fair value No. of Cost Fair value shares as at as at shares as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

DurdansMedical&SurgicalHospital

(Private)Limited - - - 10,612,858 133,877 191,031

Totalinvestmentsinequitysecurities-

Privateequity(unlisted) - - - 133,877 191,031

Total investment in equity securities 1,863,355 2,334,385 1,348,034 2,026,448

19.4. Investments in unit trusts - unlisted No. of Cost Fair value No. of Cost Fair value units as at as at units as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

TheSriLankaFund 1,265,823 112,280 125,688 1,265,823 112,280 126,876

GuardianAcuityEquityFund 1,250,000 12,500 15,438 1,250,000 12,500 14,350

GuardianAcuityFixedIncomeFund 3,750,000 37,500 44,813 3,750,000 37,500 42,600

162,280 185,939 162,280 183,826

19.5. Investments in debentures - unlisted No. of Cost Fair value No. of Cost Fair value debentures as at as at debentures as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

Redeemable unsecured debentures OceanViewLimited-6% 120 1 1 120 1 1

Totalinvestmentsindebentures-unquoted 1 1 1 1


InRupeesThousands


20. Trade and other receivables As at 31st March 2014 2013

Financial Tradereceivable 4,555 28,052

Dividendreceivable 2,422 20,703

6,977 48,755

Non financial Prepaidexpenses 50 214

50 214

7,027 48,969

21. Fair value through profit or loss financial assets21.a. Summary Note Fair value Fair value as at as at 31st March 31st March 2014 2013

Investment in equity securities Quoted 21.1 644,802 503,630

TotalInvestmentinequitysecurities 644,802 503,630

ThefairvalueoftheCompany’slistedequityportfolioisbasedonthevolumeweightedaveragepriceasat31stMarch,publishedbytheColomboStockExchange.

21.b. Movement in fair value through profit or loss financial assets Fair value Additions Disposals Change in Fair value as at fair value as at 1st April 31st March 2013 2014

Investmentinequitysecurities 503,630 626,147 (485,278) 303 644,802

503,630 626,147 (485,278) 303 644,802

Fair value Additions Disposals Change in Fair value as at fair value as at 1st April 31st March 2012 2013

Investmentinequitysecurities 456,395 369,493 (374,925) 52,667 503,630

456,395 369,493 (374,925) 52,667 503,630

Thechangeinfairvaluerepresentunrealizedgains/(losses)onfairvalueadjustmentofinvestmentportfolio.


21.1. Investments in equity securities - Quoted No. of Fair value No. of Fair value shares as at shares as at 31st March 31st March 2014 2013 Banks, Finance and Insurance CommercialBankofCeylonPLC 270,000 33,210 706,284 79,810

DevelopmentFinanceCorporationofCeylonPLC 100,200 14,419 - -

HattonNationalBankPLC 265,000 39,750 - -

HattonNationalBankPLC-NonVoting 100,000 12,000 - -

NationalDevelopmentBankPLC 395,078 70,561 350,000 58,555

169,940 138,365

Beverage, Food and Tobacco CeylonTobaccoCompanyPLC 22,827 24,105 24,827 19,382

DistilleriesCompanyofSriLankaPLC 277,896 56,413 1,026,002 170,831

80,518 190,213

Construction and Engineering AccessEngineeringPLC 350,000 7,875 - -

7,875 -

Diversified AitkenSpencePLC 510,000 49,929 - -

ExpolankaHoldingsPLC 1,772,669 15,422 - -

HemasHoldingsPLC 633,600 23,887 - -

JohnKeellsHoldingsPLC 286,221 64,972 - -

JohnKeellsHoldingsPLC-Warrants2015 333,300 22,864 - -

JohnKeellsWarrantsHoldingsPLC-2016 755,000 54,285 - -

TradeFinanceandInvestmentsPLC 136,600 2,554 594,188 146,764

233,913 146,764

Health Care TheLankaHospitalCorporationPLC 473,000 19,677 - -

19,677 -

Hotels and Travels SerendibHotelsPLC-NonVoting 66,296 1,240 - -

1,240 -

Land and Property OverseasRealty(Ceylon)PLC 600,000 12,300 291,423 8,888

12,300 8,888


InRupeesThousands


21.1. Investments in equity securities - quoted No. of Fair value No. of Fair value shares As at shares As at 31st March 31st March 2014 2013 Manufacturing KelaniTyresPLC 300,000 15,660 - -

PiramalLankaGlassCompanyPLC - - - -

RoyalCeramicsLankaPLC 250,000 19,825 2,000,000 12,200

35,485 12,200

Power and Energy LankaIOCPLC 1,110,000 42,735 - -

LaugfsGASPLC 185,200 6,019 - -

48,754 -

Telecommunications

DialogAxiataPLC 3,900,000 35,100 800,000 7,200

35,100 7,200

Total Fair value through profit or loss financial assets- Quoted 644,802 503,630

22. Cash and cash equivalents As at 31st March 2014 2013

Cashatbank 2,009 14,952

Placementswithbankinginstitutions 599,052 759,042

Investmentsunderrepurchaseagreements 208,133 188,427

Totalcashandcashequivalents 809,194 962,421

Bankoverdraft (2,697) (446)

(2,697) (446)

Net cash and cash equivalents for the purpose of cash flow statement 806,497 961,975


23. Stated capital As at 31st March 2014 2013 No. of Value No. of Value of shares shares

Ordinary shares Issuedandfullypaid 98,514,874 673,530 98,514,874 673,530

673,530 673,530

24. Capital and revenue reserve24.1. Capital reserves As at 31st March Note 2014 2013

Investmentreserve 24.1.1 8,401 8,401

Othercapitalreserve 24.1.1 178,740 178,740

Associatecompany’scapitalreserve 24.1.3 1,521,992 2,338,760

1,709,133 2,525,901

24.1.1.Investment reserve and other capital reserve TheseamountshavebeenreservedforuseinfuturedevelopmentoftheCompany.

24.1.2.Associate company’s capital reserve Shareofassociatecompany’scapitalreserveincludestheinvestor’sshareofothercomprehensiveincomeoftheassociatecompanyafterthedateof

acquisition.

24.2. Revenue reserves As at 31st March Note 2014 2013

Fairvaluethroughprofitorlossfinancialassetsreserve 24.2.1 14,526 43,436

Availableforsalefinancialassetsreserve 24.2.2 622,393 837,711

Generalreserve 24.2.3 27,217 27,217

Retainedearnings 5,378,573 4,615,994

6,042,709 5,524,358

24.2.1.Fair value through profit or loss financial assets reserve Anygainsarisingfromfairvalueadjustmentwillbetransferredfromretainedearningsto"Fairvaluethroughprofitorlossfinancialassetsreserve"

atthereportingdateandanyunrealisedgains/lossesarisingwillbetransferredfrom"Fairvaluethroughprofitorlossfinancialassetsreserve"toretainedearningstotheextentthatlossdoesnotexceedthebalanceheldinthesaidreserveasatthedate.

AnamountofRs.28.9mnwastransferredfrom(2013-Rs.43.4mnwastransferredto)"Fairvaluethroughprofitorlossfinancialassetsreserve"resultingfromthechangeinfairvalueofFairvaluethroughprofitorlossfinancialassetasshownintheStatementofChangesinEquity.


InRupeesThousands


24.2.2.Available for sale financial assets reserve Thisconsistsofnetunrealisedgains/(losses)arisingfromchangeinthefairvalueofavailableforsalefinancialassetsexcludingcumulative

impairmentslossesincurredasatthereportingdate,ifany.

24.2.3. General reserve TheserepresentstheamountssetasidebytheDirectorstomeetanycontingencies.

25. Trade and other payables As at 31st March 2014 2013

Financial Tradepayables 9,000 -

Dividendpayable(note25.1) 246,286 -

Otherpayables 19,203 16,681

274,489 16,681

Non Financial Provisionsandaccruals 1,893 1,756

1,893 1,756

276,382 18,437

25.1. Amounts due to related entities

DividendpayableincludesdividendpayabletorelatedentityCeylonGuardianInvestmentTrustPLC,amountingtoRs.158.5mn(2013-Nil).

26. Events after the reporting date Subsequenttothereportingperiod,nocircumstanceshavearisenwhichwouldrequireadjustmentstoordisclosureinthefinancialstatements.

27. Commitments and contingencies27.1. Capital expenditure commitments Therewerenomaterialcapitalcommitmentsasatthereportingdate.

27.2. Contingencies Therewerenomaterialcontingentliabilitiesasatthereportingdate.


28. Related party transactions TheCompanycarriedouttransactionsintheordinarycourseofitsbusinesswithpartieswhoaredefinedasrelatedpartiesinSriLankaAccounting

Standard(LKAS24)-“RelatedPartyDisclosures”,thedetailsofwhicharereportedbelow.

28.1. Parent and ultimate controlling party CeylonGuardianInvestmentTrustPLCistheparentcompanyofCeylonInvestmentPLC.IntheopinionoftheDirectors,CarsonCumberbatchPLCis

theultimateparentcompanyofCeylonInvestmentPLC.

28.2. Transactions with Key Management Personnel (KMP) AccordingtoSriLankaAccountingStandard(LKAS24)-“RelatedPartyDisclosures”,KeyManagementPersonnel(KMP)arethosehavingauthority

andresponsibilityforplanningandcontrollingtheactivitiesoftheentity.Accordingly,theDirectorsoftheCompanyanditsparentcompany(includingexecutiveandnon-executivedirectors)andtheirimmediatefamilymembershavebeenclassifiedasKeyManagementPersonneloftheCompany.

NotransactionhavetakenplacebetweentheCompanyanditsKMPduringtheyear,exceptasdisclosedbelow.

28.3. Key management personnel compensation comprised the following; For the Year ended 31 st March 2014 2013

Short-termemployeebenefits 2,100 2,100

Post-employmentbenefits - -

Terminationbenefits - -

Otherlong-termbenefits - -

Noncashbenefits - -

2,100 2,100

28.4. Transactions with Related Companies

Name of the related company Name/s of the common Director/s

Nature of transactions Value of the transaction

2014 2013

Parent company

CeylonGuardianInvestmentTrustPLC I.Paulraj Dividendpaid 267,474 79,259

D.C.R.Gunawardena

Mrs.M.A.R.C.Cooray

A.deZ.Gunasekera

V.M.Fernando

K.Selvanathan

InRupeesThousands



Name of the related company Name/s of the common Director/s

Nature of transactions Value of the transaction

2014 2013

Associate

RubberInvestmentTrustLimited I.Paulraj Dividendsreceived 194,926 43,433

D.C.R.Gunawardena

A.P.Weeratunge

Fellow subsidiaries

GuardianFundManagementLimited(GFM)

K.Selvanathan Portfoliomanagementfeespaid 16,501 11,619

A.P.Weeratunge

"CarsonsManagementServices(Private)Limited

A.P.Weeratunge Supportservicefeespaid 9,341 5,387

K.Selvanathan Computerfeespaid 420 420

Secretarialfeespaid 300 300

Other entities

HattonNationalBankPLC Mrs.M.A.R.C.Cooray Interestincomereceived - 21,096

R.Theagarajah* Placementindemanddeposits 831 831

TheCompanyasatthereportingdatecarriesanapprovedinter-changeableshort-termborrowingfacilitywithCeylonGuardianInvestmentTrustPLC,theparentcompany,tothevalueofRs.300/-mn(2013-Rs.300mn)

*Mr.R.TheagarajahisaDirectorofCarsonCumberbatchPLC,theultimateentityofCeylonInvestmentPLC,andwastheCEO/MDofHattonNationalBankPLCduringthefinancialyear.

Amountsduetorelatedentitiesaredisclosedinnote25.1.

28.5. Significant Holdings Holding % 2014 2013

Associate

RubberInvestmentTrustLimited 49.95% 49.95%


29. Financial instruments Financial risk management - overview TheCompanyhasexposuretothefollowingrisksarisingfromfinancialinstruments:

Creditrisk

Liquidityrisk

Marketrisk

ThisnotepresentsinformationabouttheCompany’sexposuretoeachoftheaboverisks,theCompany’sobjectives,policiesandprocessesformeasuringandmanagingrisk,andtheCompany’smanagementofcapital.Pages14to17alsoincludeareviewofrisksfacedbytheCompanyandtheapproachofmanagingsuchrisks.

Risk management framework TheCompany’sBoardofDirectorshasoverallresponsibilityfortheestablishmentandoversightoftheCompany’sriskmanagementframework.

TheBoardofDirectorshasdelegatedthisfunctiontotheChiefExecutiveOfficerofGuardianFundManagementLimited,theFundManagers,andCarsonsManagementServices(Private)Limited,theManagers;whoareresponsiblefordevelopingandmonitoringtheGroup’sriskmanagementpoliciesandreportsregularlytotheBoardofDirectorsonitsactivities.

TheCompany’sriskmanagementpoliciesareestablishedtoidentifyandanalysetherisksfacedbytheCompany,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.Riskmanagementpolicies,andsystemsarereviewedregularlytoreflectchangesinmarketconditionsandtheCompany’sactivities.

Thecompany’sinvestmentportfoliocompriseslistedandunlistedequitysecurities.Thecompany’sinvestmentmanagerhasbeengivendiscretionaryauthoritytomanagetheassetinlinewiththecompany’sinvestmentobjectives.

Further,anInvestmentCommitteedrawnfromacrosstheCarsonsGroupdirectorateprovideadviceandinsightstothefundmanagementteamtofurthersharpenandrefinetheirdecisionmakingprocess.ThiscomprehensivemanagementstructuredeterminestheobjectivesandpoliciesoftheCompany’sriskmanagementframeworkandpromotesacultureofriskawarenessandbalancedrisk-takingwithintheCompany.

29.1. Credit risk CreditriskistheriskoffinanciallosstotheCompany,ifacustomeroracounterpartytoafinancialinstrumentoranobligedpartytoareceivable

failstomeetitscontractualobligationsandarisesprimarilyontheCompany’sinvestmentsinfixedincomeearningsecurities,placementswithbankinginstitutionsandreceivablesfrommarketintermediariesandothercounterparties,theCompanyhasdealingswith.

29.1.1. Credit risk exposure and managing the risk Thecarryingamountoffinancialassetsrepresentsthemaximumcreditexposure.Themaximumexposuretocreditriskattheendofthereporting

periodwasasfollows.

Carrying Amount As at 31st March Note 2014 2013

Availableforsalefinancialassets-debentures 19.5 1 1

Availableforsalefinancialassets-Investmentinunittrusts 19.4 185,939 183,826

Tradeandotherreceivables(financial) 20 6,977 48,755

Cashandcashequivalents-Cashatbank 22 2,009 14,952

Cashandcashequivalents-Placementswithbankinginstitutions 22 599,052 759,042

Cashandcashequivalents-Investmentsunderrepurchaseagreements 22 208,133 188,427

1,002,111 1,195,003


InRupeesThousands


Available for sale financial assets Debentures Theserepresentsinvestmentindebentures,whichyieldsinterestincomeonacontinuingbasis.HowevertheCompany'sexposuretocreditrisk,

arisingfromtheseinvestmentsisinsignificant,consideringthenetinvestmentvalue.

Investment in unit trusts TheCompanyhasinvestedinthreeunittrusts;TheSriLankaFund,GuardianAcuityEquityFundandGuardianAcuityFixedIncomeFund.TheGroup

hasinfusedpromoterscapitaltoeachofthesefundsandthemanagementoftheunderlyingfundsrestswiththeGroup'sinvestmentmanagementarm;GuardianFundManagementLimited.

Eachoftheseinvestmentsarecarriedattheirfairvalues;beingthenetassetvalueofthefundateachreportingdate.Thefundscarryamixofequityandfixedincomeearninginstrumentsatagivenpointintime,withdueconsiderationonliquidity,whichwillenabletorealizeitscarryingvalueswithaminimumlossinvalue.Further,thesefundsareregulatedinsuchawaythatthefundcarryadequateassetsinhighlyliquidform,generally5%ofthenetassetsvalue,whichwillensurecustomerwithdrawalsaresettledpromptly.

AdueevaluationprocesshasbeencarriedoutbytheCompanypriortotheseinvestments,whichincludedanassessmentintotheirabilitytorepay,intheeventtheCompanywishestowithdraw.

Trade and other receivables Asignificantportionofthetradeandotherreceivablecompriseofproceedsreceivableondisposalofquotedsecuritiesanddividendsreceivable.

Settlementproceduressurroundingtheequitymarketsarehighlystructuredandregulated.AT+3settlementcycleisinplacewiththeinvolvementofacustodianbank,whichisbeingdulymonitoredbytheregulator,henceprovidesassuranceontherealizationofthebalances.Further,adueevaluationprocess,includingacontinuousassessmentmechanismisinplaceinselectingthemarketintermediariesthattheCompanytransactswith,whichinvolvespriorapprovalfromtheBoardofDirectors.

Dividendreceivableisaccountedforwhentherighttoreceivethedividendisestablished.Thebalancesaresettledwithinamaximumperiodof4-6weeksandnoriskofdefault,basedonpastexperienceintheindustry.

Age profile of trade and other receivables Theagingoftradeandotherreceivablesattheendofthereportingperiodthatwerenotimpairedwasasfollows

As at 31st March 2014 2013

Lessthan30days 6,977 48,755

6,977 48,755

TheCompanyhasneitherrecognizedanimpairmentlossnoraallowanceforimpairmentofitstradeandotherreceivablesoverthepast5yearsperiod.

Cash and cash equivalents TheCompanyheldcashandequivalentsintheformofshorttermfixeddeposits,Repoinvestmentsanddemanddepositswithbanks/financials

institutioncounterparties.HencetheCompanyisexposedtotheriskthatsuchcounterpartiesfailingmeettothecontractualobligation.


TheCompanyminimizethecreditriskbymonitoringthecreditworthinessofthecounterpartiesperiodically.

Ananalysisofbanking/financialinstitutionalcounterpartieswithwhomthebalanceswereheldateachreportingperiodendispresentedbelow.


Creditrating

AAA 240 240

AA+ 238,205 947,470

AA 208,133 831

AA- 361,679 -

Unrated 937 13,880

809,194 962,421

29.2. Liquidity risk LiquidityriskistheriskthattheCompanyencountersdifficultyinmeetingtheobligationsassociatedwithitsfinancialliabilitiesthatarerequiredto

besettledbydeliveringcashand/oranotherfinancialasset.

29.2.1.Exposure to liquidity risk Thefollowingarethecontractualmaturitiesattheendofthereportingperiodarisingonfinancialliabilities.

Contractual cash flows As at 31st March 2014 Carrying up to 3 3-12 More than amount Total months months a year Non derivative financial liabilities

Tradeandotherpayables 274,489 274,489 274,489 - -

Bankoverdrafts 2,697 2,697 2,697 - -

277,186 277,186 277,186 - -

Contractual cash flows As at 31st March 2013 Carrying up to 3 3-12 More than amount Total months months a year Non derivative financial liabilities

Tradeandotherpayables 16,681 16,681 16,681 - -

Bankoverdrafts 446 446 446

17,127 17,127 17,127 - -

Theratioofnetassetswithaveryshorterexpectedliquidationperiod(liquidassets)tototalnetassetsissetoutbelow.


Totalliquidassets 210,142 203,379

Liquidassetsasa%oftotalnetassets 2% 2%


InRupeesThousands


29.2.2.Management of liquidity risk TheCompany’sapproachtomanagingliquidityistoensure,asfaraspossible,thatitwillalwayshavesufficientliquiditytomeetitsliabilitieswhen

due,underbothnormalandstressedconditions,withoutincurringunacceptablelossesorriskingdamagetotheCompany’sreputation.

TheCompanymaintainsaportionofitsassetsinhighlyliquidform;demanddepositsandplacementsinrepurchaseagreementsinordertocapitalizeontheopportunitiesarisinginvolatilemarketconditionsandtomeetitscontractualobligationsduringthenormalcourseofitsoperations.

AsignificantportionoftheCompany’sinvestmentportfoliocompriseslistedequityinvestmentswhichprovidestheCompanywithexposuretoadequateliquidity,giventheabilitytoconvertintocashandcashequivalentswithinaveryshortperiodoftime.

Inaddition,theCompanyhasaccesstoapprovedfinancingarrangementsintheformofaninter-changebleoverdraftfacilitywithCeylonGuardianInvestmentTrustPLC,theparentcompany,ananalysisofwhichasateachofthereportingdatesaregivenbelow.


Unutilisedshorttermcreditfacilities 1,050,000 1,050,000

1,050,000 1,050,000

29.3. Market risk "Themarketriskisexposuretoadversemovementsinthesecuritymarketsforbothequityandfixedincomeinvestments,whichcanresult

variationsintheanticipatedreturnsfromthosesecurities.Allfinancialinstitutionsfacemarketrisks,createdbychangesinthemacroenvironmentrelatedtopoliticalfactors,nationalsecurity,economicmanagementandglobalizationinfluenceswhichhaveanimpactonsystematicrisk."

29.3.1.Interest rate risk TheCompanyisexposedtointerestraterisk,arisingfromitsplacementswithbankinginstitutions,investmentsunderrepurchaseagreementand

short-termfinancingfacilities,intheeventsuchhavebeenutilized.

Profile Attheendofthereportingperiod,theinterestrateprofileoftheCompany’sinterest-bearingfinancialinstrumentsareasfollows.

Carrying Amount As at 31st March 2014 2013

Financial assets Placementswithbankinginstitutions 599,052 759,042

Investmentsunderrepurchaseagreements 208,133 188,427

807,185 947,469

Financial liabilities

Bankoverdrafts 2,697 446

2,697 446


Theaveragebaseinterestratesappliedfortheabovefinancialinstrumentsareasfollows;


CommercialBanksAveragedWeightedPrimeLendingRate(AWPLR)* 8.81% 13.86%

CommercialBanksAveragedWeightedFixedDepositRate(AWFDR)* 10.47% 13.94%

*Monthlyaveragerate

Sensitivity Analysis Achangeof1%ininterestratesattheendofthereportingperiodwouldhaveincreased/(decreased)profitorlossbytheamountsshownbelow.

Profit or loss Movement in interest rate Increase in 1% Decrease in 1%

As at 31 March 2014 -Oninterestearningassets 8,072 (8,072)

-Oninterestbearingliabilities (27) 27

8,045 (8,045)

As at 31 March 2013

-Oninterestearningassets 9,475 (9,475)

-Oninterestbearingliabilities (4) 4

9,471 (9,471)

29.3.2. Other market price risks Equity price risk TheCompanyitselfbeinganinvestmenthouse,wheretheprincipalactivitybeingtoactasspecializedinvestmentvehicletoundertake,among

others;listedandprivateequityinvestments,accordinglytheCompanyisexposedtoequitypricerisk,havingasubstantialportionof80%(2013–74%)ofitsdiscretionaryinvestmentportfoliodesignatedaslistedinvestmentsintheColomboStockExchangeandprivateequityinvestments,marketvolatilitiesbringinsubstantialvolatilitytotheCompany'searningsandvalueofitsassetbaseasatthereportingdate.

Listed equity investments ManagementoftheCompanymonitorsthemixofdebtandequitysecuritiesinitsinvestmentportfoliobasedonmarketindices,wheredecisions

concernedwiththetimingofbuy/selldecisionsarewellsupportedwithstructuredin-houseresearchrecommendations.TransactionsofamajormagnitudearesubjecttoreviewandapprovalbytheInvestmentCommittee.

Private equity investments Dueevaluationsarecarriedoutbefore-hand,extendingtobothfinancialandoperationalfeasibilityoftheprivateequityprojectsthattheCompany

venturesinto,withaviewtoascertaintheCompany’sinvestmentdecisionandtherisksinvolved.

"Continuousmonitoringoftheoperationsagainstthebudgetsandtheindustrystandardsensurethattheprojectsmeetthedesiredoutcome,andtherebythereturns.Further,theCompanygenerallycarriesinvestmentagreementswiththepartiesconcerned,whichcarryspecific‘exitclauses’toprivateequityprojects-typicallyan‘InitialPublicOffering’ora‘Buy-out’ataspecifiedpriceagreed,whichprovidescovertoacertainextentagainstmovementsinmarketconditions."


InRupeesThousands



Availableforsalefinancialassets 19 2,520,325 2,210,275

Fairvaluethroughprofitorlossfinancialassets 21 644,802 503,630

3,165,127 2,713,905

AbroadanalysisoftheinvestmentsmadebytheCompany,basedontheindustry/sectorisgiveninnotes19.1and21.1.

29.3.3. Currency risk TheCompanyisexposedtocurrencyriskonitsinvestmentsmadethataredenominatedinacurrencyotherthantherespectivefunctionalcurrencies

oftheCompany,primarilytheSriLankaRupee.Accordingly,theCompanyisexposedtocurrencyriskprimarilyarisingfromitsinvestmentin‘TheSriLankaFund’–acountryfundincorporatedinCaymansIslands,towhichtheCompanyhasinfusedpromoterscapital.

Thenetexposuretocurrencyrisk,asatthereportingdateisasfollows.

Carrying Amount As at 31st March Currency 2014 2013

InvestmentsinUnitTrusts-TheSriLankaFund LKR(000') 125,688 126,876

InvestmentsinUnitTrusts-TheSriLankaFund USD 961,432 1,012,497

Exchangeratesappliedasatthereportingdates-USD/LKR 130.73 125.31

Sensitivity analysis Astrengthening/(weakening)oftheUSDagainsttheSriLankaRupeewouldhaveincreased/(decreased)theequityasattheendoftheperiod

bytheamountsshownbelow.Theanalysisassumesthatallothervariables,inparticularinterestrates,remainconstantandignoresanyimpactoffurtherinvestmentsorwithdrawals.

Noimpacttoprofitorlossarisesfromamovementintheforeignexchangerates,providedsuchmovementsinvalueof'Availableforsalefinancialassets'resultingfromamovementinforeignexchangerates.Suchmovementsarerequiredtoberecognisedinothercomprehensiveincome,asprovidedforinSriLankaAccountingStandard(LKAS-39-"FinancialInstruments;Recognitionandmeasurement".

Equity Movement in exchange rate Strengthening Weakening

As at 31 March 2014 -UnitedStateDollars(1%movement) (1,257) 1,257

(1,257) 1,257

As at 31 March 2013 -UnitedStateDollars(1%movement) (1,269) 1,269

(1,269) 1,269


29.4. Accounting classification and fair values Thefairvaluesoffinancialassetsandliabilitiestogetherwiththerespectivecarryingamountsasshowninthestatementoffinancialpositionareas

follows.

As at 31st March 2014 Fair value Held to Loans and Available Other Total Fair through maturity receivables for sale financial carrying value profit or loss liabilities amount

Assets Availableforsalefinancialassets - - - 2,520,325 - 2,520,325 2,520,325

Tradeandotherreceivables - - 6,977 - - 6,977 6,977

Fairvaluethroughprofitorlossfinancialassets 644,802 - - - - 644,802 644,802

Cashandcashequivalents - - 809,194 - - 809,194 809,194

Totalfinancialassets 644,802 - 816,171 2,520,325 - 3,981,298 3,981,298

Liabilities Tradeandotherpayables - - - - 274,489 274,489 274,489

Bankoverdraft 2,697 2,697 2,697

Totalfinancialliabilities - - - - 277,186 277,186 277,186

As at 31st March 2013 Fair value Held to Loans and Available Other Total Fair through maturity receivables for sale financial carrying value profit or loss liabilities amount

Assets Available-for-salefinancialassets - - - 2,210,275 - 2,210,275 2,210,275

Tradeandotherreceivables - - 48,755 - - 48,755 48,755

Fairvaluethroughprofitorlossfinancialassets 503,630 - - - - 503,630 503,630

Cashandcashequivalents - - 962,421 - - 962,421 962,421

Totalfinancialassets 503,630 - 1,011,176 2,210,275 - 3,725,081 3,725,081

Liabilities

Tradeandotherpayables - - - - 16,681 16,681 16,681

Bankoverdraft 446 446 446

Totalfinancialliabilities - - - - 17,127 17,127 17,127

Fair value hierarchy Thetablebelowanalysesfinancialinstrumentscarriedatfairvalue,bythelevelsinthefairvaluehierarchy.Thedifferentlevelshavebeendefinedas

follows.

Level1:Availabilityofquotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.

Level2:Useofinputsotherthanquotedpricesthatareobservablefortheassetorliability,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedprices).

Level3:Useofinputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).


InRupeesThousands


Level 1 Level 2 Level 3 Total

As at 31 Mar 2014

Equitysecurities-availableforsalefinancialassets 2,519,351 - 974 2,520,325

Equitysecurities-Fairvaluethroughprofitorlossfinancialassets 644,802 - - 644,802

3,164,153 - 974 3,165,127

As at 31 Mar 2013 Equitysecurities-availableforsalefinancialassets 2,018,700 191,031 544 2,210,275

Equitysecurities-Fairvaluethroughprofitorlossfinancialassets 503,630 - - 503,630

2,522,330 191,031 544 2,713,905

NomovementshaveoccurredinthefairvaluemeasurementsinLevel3ofthefairvaluehierarchy,duringtheyear.

30. Segmental reporting Thecompany’sChiefOperatingDecisionMaker(CODM)monitorstheoperatingresultsoftheentityasawholeconsideringtheoperationsasasingle

segment(Equityinvestments)forthepurposeofmakingdecisionsaboutresourceallocationandperformance.Thereforenodisclosureismadeonoperatingsegments.

31. Comparative figures

Previousyears'figuresandphraseshavebeenrearrangedwherevernecessarytoconformtothecurrentyear'spresentations.

Changes in accounting policies and methods of computation - Equity accounted investees TheGroupfinancialstatementsofBukitDarahPLChasbeenrestatedduetoamendmentstoSLFRS19whichremovesthecorridormechanismfor

definedbenefitplansandnolongerallowsacturialgainsandlossestoberecognisedinprofitorloss.Thedistinctionbetweenshorttermandlongtermemployeebenefitsisbasedonexpectedtimingofsettlementratherthanemployeeentitlement.Thisresultedinre-statementofthefinancialstatementsoftheassociateCompanyRubberInvestmentTrustLimited.Accordingly,theshareofprofitandtheshareofothercomprehensiveexpensesofequityaccountedinvesteesforthefinancialyearended31stMarch2013havebeenre-statedasgivenbelow.

For the year ended 31st March 2013 Previously reported Restated

Statement of comprehensive income Shareofprofitofequityaccountedinvesteesnetoftax 725,942 728,539

Shareofothercomprehensiveexpensesofequityaccountedinvesteesnetoftax (140,714) (162,790)

585,228 565,749

As at 31st March 2013 Previously reported Restated

Statement of financial position Investmentinequityaccountedinvestees 5,043,572 5,024,093

5,043,572 5,024,093

32. Responsibility for financial statements TheBoardofDirectorsisresponsibleforthepreparationandpresentationofthefinancialstatements.Thisismorefullydescribedundertherelevant

clauseintheDirectors’report.


SLFRS/LKAS SLAS For the year ended/ As at 31st March 2014 2013 2012 2011 2010

Financial highlights

Revenue

Netgainondisposalofinvestments 323,900 282,639 671,129 556,884 830,849

Dividendincome 252,761 134,591 129,763 80,394 129,052

Interestincome 115,046 72,180 36,126 11,303 61,403

691,707 489,410 837,018 648,581 1,021,304

Less:

Dividendreceivedfromassociatecompany (194,928) (43,433) (40,970) (25,193) (92,460)

Salesproceedonsalere-purchasebyassociatecompany - - - - (348,392)

496,779 445,977 796,048 623,388 580,452

Fairvalueadjustment-unrealized 303 52,667 (322,893) 112,410 84,788

Profit on investment activities 497,082 498,644 473,155 735,798 665,240

Profit before taxation 1,182,416 1,200,571 1,087,196 1,341,057 1,002,992

Incometaxexpenses (30,059) (18,603) (6,129) (434) (14,109)

Profit for the year 1,152,357 1,181,968 1,081,067 1,340,623 988,883

Dividendpaid 418,688 123,144 98,515 129,421 169,020

Statement of financial position

Capital employed

Statedcapital 673,530 673,530 673,530 673,530 506,074

Reserves 7,751,842 8,050,259 7,093,279 6,994,586 4,242,443

Total equity 8,425,372 8,723,789 7,766,809 7,668,116 4,748,517

Assets employed

Investments 7,259,223 7,234,368 6,719,319 7,169,723 4,366,021

Currentassets 1,461,023 1,515,020 1,065,141 713,597 424,201

8,720,246 8,749,388 7,784,460 7,883,320 4,790,222

Current liabilities (294,874) (25,599) (17,651) (215,204) (41,705)

Net assets 8,425,372 8,723,789 7,766,809 7,668,116 4,748,517

Statement of Cash Flow

Netcashgeneratedfrom/(usedin)operatingactivities 16,037 492,886 882,207 (86,241) 314,216

Netcashusedinfinancingactivities (171,515) (122,305) (96,272) (125,720) (1,078,203)

Net (decrease)/increase in cash & cash equivalents (155,478) 370,581 785,935 (211,961) (763,987)

Five year summaryInRupeesThousands


SLFRS/LKAS SLAS For the year ended / As at 31st March 2014 2013 2012 2011 2010

Ratios & statistics

Operational ratio

Returnonordinaryshareholdersfunds(%) 13.47 13.55 13.91 17.48 20.83

Liquidity ratio

Currentratio(Times) 4.95 59.18 60.34 3.32 10.17

Investor ratio

Earningspershare(adjusted)(Rs.) 11.70 12.00 10.97 13.61 9.72

Dividendpershareproposed/Interim(Rs.)** 2.50 1.75 1.25 1.00 6.70

Dividendcover(times) 4.68 6.84 8.78 13.61 1.45

Dividendgrowth(%) 43 40 25 (85) (4)

Dividendyield(%) 3.36 2.19 1.60 0.66 2.47

Dividendpayoutratio(%) 21.37 14.62 11.39 7.35 68.90

Netassetspershare-bookvalue(Rs.) 85.52 88.55 78.84 77.84 245.83

Netassetspershare-marketvalue(Rs.) 117.55 130.74 139.03 180.61 340.86

Marketvaluepershare(Rs.)* 74.50 80.00 78.30 151.00 271.00

Priceearningratio(times) 6.37 6.67 7.14 11.10 27.88

Pricetobookvalueratio(times) 0.87 0.90 0.99 1.94 1.10

Fairvalueofinvestments(Rs.) 11,865,565 12,855,629 13,697,271 17,797,997 6,602,416

Marketcapitalisation(Rs.000') 7,339,358 7,881,190 7,713,715 14,875,746 5,234,810

AllSharePriceIndex(points) 5,968 5,736 5,420 7,226 3,725

S&PSL20Index(points) 3,280 3,294 2,986 3,893 2,142

*Asat31stMarch.

**Basedonproposed/interimdividends.


For the year ended 31st March 2014 2013 Change (%)

Revenue 3,818,146 3,441,712 11

Profitfromoperations 3,516,647 3,642,862 (3)

Shareofprofitofequityaccountedinvesteesnetoftax 5,583,745 5,622,311 (1)

Profitbeforetaxation 9,087,818 9,265,096 (2)

Profitfortheyear 8,856,790 9,121,532 (3)

Totalothercomprehensiveexpensefortheyear (7,932,410) (785,955) 909

Totalcomprehensiveincomefortheyear 924,380 8,335,577 (89)

Netcashgeneratedfromoperatingactivities 123,259 3,803,708 (97)

Totalequity 64,448,649 68,772,479 (6)

Returnonordinaryshareholders'funds(%) 13.74 13.26 7

Earningspershare(USD) 0.09 0.09 -

Dividendpershare(USD)* 0.02 0.01 100

Netassetspershare-Bookvalue 0.65 0.70 (6)

Netassetspershare-Marketvalue 0.90 1.03 (13)

CeylonInvestmentPLC-Fundvalue** 90,763,902 101,345,124 (10)

Marketcapitalization(Company) 56,141,346 62,129,996 (10)

*Basedonproposed/interimdividends

**Basedonfairvalueofportfolioafteradjustingforcashandcashequivalents

Financial Highlights - US $ FinancialsInUnitedStateDollars


Statement of Comprehensive IncomeInUnitedStateDollars

For the year ended 31st March 2014 2013

Revenue 3,818,146 3,441,712

Netchangeinfairvalueoffairvaluethroughprofitorlossfinancialassets 2,329 406,444

Profit on investment activities 3,820,475 3,848,156

Administrativeandotheroperatingexpenses (303,828) (205,294)

Profit from operations 3,516,647 3,642,862

Netfinanceincomeexpense (12,574) (77)

Profit from operations after net finance expenses 3,504,073 3,642,785

Shareofprofitofequityaccountedinvesteesnetoftax 5,583,745 5,622,311

Profit before taxation 9,087,818 9,265,096

Incometaxexpenses (231,028) (143,564)

Profit for the year 8,856,790 9,121,532

Other comprehensive income

Shareofothercomprehensiveexpensesofequityaccountedinvesteesnetoftax (6,277,519) (1,256,290)

Netchangeinfairvalueofavailableforsalefinancialassets 253,286 2,108,713

Transferofrealizedgainsonavailableforsalefinancialassets (1,950,357) (1,616,847)

Foreigncurrencydifferencesarisingontranslationofavailableforsalefinancialassets 42,180 (21,531)

Total other comprehensive expense for the year (7,932,410) (785,955)

Total comprehensive income for the year 924,380 8,335,577

Earnings per share (USD) 0.09 0.09

Dividend per share (USD)* 0.02 0.01

*Dividendpershareisbasedontheproposed/interimdividends.


InUnitedStatesDollars


ASSETS

Non-Current Assets

Investmentinequityaccountedinvestees 36,249,507 39,606,567

Availableforsalefinancialassets 19,278,857 17,424,320

Total non-current assets 55,528,364 57,030,887

Current Assets

Tradeandotherreceivables 53,752 386,039

Fairvaluethroughprofitorlossfinancialassets 4,932,319 3,970,280

Cashandcashequivalents 6,189,811 7,587,079

Total current assets 11,175,882 11,943,398

Total assets 66,704,246 68,974,285

EQUITY AND LIABILITIES

Equity

Statedcapital 5,868,428 5,868,428

Capitalreserves 16,828,339 23,105,935

Revenuereserves 41,751,882 39,798,116

Total equity 64,448,649 68,772,479

Current Liabilities

Trade&otherpayables 2,114,145 145,346

Currenttaxpayable 120,822 52,944

Bankoverdraft 20,630 3,516

Totalcurrentliabilities 2,255,597 201,806

Total liabilities 2,255,597 201,806

Total equity and liabilities 66,704,246 68,974,285

Net assets per share - Book value (USD) 0.65 0.70

Net assets per share - Market value (USD) 0.90 1.03

Statement of Financial Position


SLFRS/LKAS SLAS For the year ended/ As at 31st March 2014 2013 2012 2011 2010

Financial highlights Revenue Netgainondisposalofinvestments 2,489,431 2,181,186 5,982,608 5,071,372 7,231,691 Dividendincome 1,942,672 1,038,668 1,156,739 699,748 1,123,266 Interestincome 884,221 557,029 322,036 98,381 534,450 5,316,324 3,776,883 7,461,383 5,869,501 8,889,407 Less: Dividendreceivedfromassociatecompany (1,498,178) (335,171) (365,216) (219,288) (804,770) Salesproceedonsalere-purchasebyassociatecompany - - - - (3,032,396) 3,818,146 3,441,712 7,096,167 5,650,213 5,052,241 Fairvalueadjustment-unrealized 2,329 406,444 (2,878,348) 1,018,853 737,993 Profit on investment activities 3,820,475 3,848,156 4,217,819 6,669,066 5,790,234 Profit before taxation 9,087,818 9,265,096 9,691,531 12,154,963 10,490,302 Incometaxexpenses (231,028) (143,564) (54,635) (3,934) (3,934) Profit for the year 8,856,790 9,121,532 9,636,896 12,151,029 10,486,368 Dividendpaid 1,892,915 1,330,460 961,308 892,911 1,126,482 Statement of financial position Capital employed Statedcapital 5,868,428 5,868,428 5,868,428 5,868,428 4,374,019 Reserves 58,580,221 62,904,051 54,762,399 63,589,144 37,250,429

Total equity 64,448,649 68,772,479 60,630,827 69,457,572 41,624,448 Assets employed Investments 55,528,364 57,030,887 52,453,701 64,943,134 38,271,573 CurrentAssets 11,175,882 11,943,398 8,314,918 6,463,741 3,749,790 66,704,246 68,974,285 60,768,619 71,406,875 42,021,363 Current liabilities (2,255,597) (201,806) (137,792) (1,949,303) (396,915) Net assets 64,448,649 68,772,479 60,630,827 69,457,572 41,624,448 Statement of cash flow Netcashgeneratedfrom/(usedin)fromoperatingactivities 123,259 3,803,708 7,822,376 (755,969) 2,734,929 Netcashusedinfinancingactivities (1,318,232) (943,854) (831,592) (1,102,034) (9,384,655) Net (decrease)/increase in cash & cash equivalents (1,194,973) 2,859,854 6,990,784 (1,858,003) (6,649,726)

Five year summaryInUnitedStateDollars


RATIOS & STATISTICS For the year ended/As at 31st March 2014 2013 2012 2011 2010

Operating ratio Returnonordinaryshareholders'funds(%) 13.74 13.42 15.89 17.49 25.19 Liquidity ratio Currentratio(times) 4.95 59.18 60.34 3.32 9.45 Investor ratios Earningspershare 0.09 0.09 0.08 0.12 0.38 Netassetspershare-Bookvalue 0.65 0.70 0.62 0.71 2.15 Netassetspershare-Marketvalue 0.90 1.03 1.09 1.64 2.99 Marketcapitalization 56,141,346 62,129,996 60,216,354 134,744,076 45,887,184 Fairvalueofinvestments 90,763,902 101,345,124 106,926,394 162,975,888 57,876,275

Five year summary

InUnitedStateDollars


1. Basis of conversion ThetranslationofSriLankanRupeeamountsintoUSDollaramountsissolelyfortheconvenienceoftheshareholders,investors,bankersandother

usersoffinancialstatements.

ThetranslationofthefinancialstatementsintoUSDollarwereeffectedbasedonthefollowingexchangerates.

2014 2013

Incomestatement-Averagerate 130.11 129.58

Monetaryassetsandliabilities-Closingrate 130.73 126.85

Non-monetaryassetsandliabilities-Closingrate 130.73 126.85

Ordinarysharecapital-Historicalrate

Gainsorlossesonconversionareaccountedforintherevenuereserve

2. Revenue reserve For the year ended 31st March 2014 2013 US $ US $

Beginningoftheyear 39,798,116 30,400,174

Netmovementduringtheyear 3,983,944 8,641,534

43,782,060 39,041,708

Currencyfluctuations (2,030,178) 756,408

Asattheendoftheyear 41,751,882 39,798,116

(AllfiguresareinUnitedstatesDollars)



1. Stock Exchange Listing CeylonInvestmentPLCisapublicquotedcompany,theordinarysharesofwhicharelistedonthemainboardoftheColomboStockExchangeof

SriLanka.

StockExchangecodeforCeylonInvestmentPLCsharesis“CINV”.

2. Share valuation ThemarketpriceoftheCompany’ssharesasat31stMarch2014wasRs.74.50pershare(2013–Rs.80/-).

3. Ordinary shareholders As at 31st March 2014 2013

Numberofshareholders 2,338 2,442

Thenumberofsharesheldbynon-residentsasat31stMarch,2014was4,405,177whichamountsto4.47%(2013–4,060,531/4.12%).

Distribution of Shares

Residents Non-Residents Total

No. of shareholders

No. of Shares % No of shareholders

No. of Shares % No. of shareholders

No. of Shares

%

1 - 1,000 1,427 385,094 0.39 12 6,610 0.01 1,439 391,704 0.40

1001 - 10,000 613 2,142,496 2.17 23 112,299 0.11 636 2,254,795 2.28

10,001 - 100,000 170 5,260,500 5.34 28 844,567 0.86 198 6,105,067 6.20

100,001 - 1,000,000 52 17,328,593 17.59 07 1,517,695 1.54 59 18,846,288 19.13

Above1,000,000 05 68,993,014 70.04 01 1,924,006 1.95 06 70,917,020 71.99

Total 2,267 94,109,697 95.53 71 4,405,177 4.47 2,338 98,514,874 100.00

Categories of shareholders No. of shareholders No. of Shares %

Individuals 2,143 19,688,019 19.98

Institutions 195 78,826,855 80.02

Total 2,338 98,514,874 100.00

4. Market performance – ordinary shares For the year ended 31st March 2014 2013

Sharepriceasat31stMarch(Rs.) 74.50 80.00 Highest(Rs.) 102.00 115.00 Lowest(Rs.) 73.10 58.10 Valueofsharestraded(Rs.) 241,309,176 160,211,091 No.ofsharestraded 2,996,697 1,853,360 Volumeoftransactions(Nos.) 2,138 2,410 Marketcapitalization(Rs.’000) 7,339,358 7,881,190

Information to shareholders and investors


5. Market capitalisation MarketcapitalisationoftheCompany,whichisthenumberofordinarysharesinissuemultipliedbythemarketvalueofanordinarysharewas

Rs.7,339,358,113/-asat31stMarch2014(asat31stMarch2013-Rs.7,881,189,920/-).

6. Record of Bonus Issues, Rights Issues, Repurchase and Subdivision of shares Theundermentionedshareissues/repurchasehavebeenmadebytheCompanytodate,inrelationtoitsordinaryshares:

Year ended 31st March

Month Issue Basis No. of Shares Cumulative No. of shares

1919 InitialCapital - 547,343 547,343

1954 Bonus 1:10 54,734 602,077

1956 Bonus 1:10 60,208 662,285

1988 Bonus 1:1 662,285 1,324,570

1991 Bonus 1:5 264,914 1,589,484

1999 Bonus 1:4 397,371 1,986,855

2000 Bonus 1:4 496,714 2,483,569

2002 April Rights 1:4 620,892 3,104,461

May Bonus 1:4 776,115 3,880,576

2003 June Rights 1:3 1,293,525 5,174,101

August Bonus 1:6 862,350 6,036,451

2004 July Rights 1:2 3,018,225 9,054,676

September Bonus 1:2 4,527,338 13,582,014

2005 March Rights 1:3 4,527,338 18,109,352

June Bonus 1:3 6,036,451 24,145,803

2009 October Repurchase 1:5 (4,829,161) 19,316,642

2010 October Subdivision 5:1 77,266,568 96,583,210

October Capitalizationofreserves 1:50 1,931,664 98,514,874

7. Dividends A1stInterimDividendofRs.2/50pershareforthefinancialyearended31stMarch2014,amountingtoRs.246,287,185/-wasdeclaredandpaid

on4thApril2014.

8. Public holding Thetotalpercentageofsharesheldbypublicasat31stMarch2014was35.19%(2013–35.64%).

9. Major Shareholders AlistofmajorshareholdersoftheCompanyasatthebalancesheetdateisprovidedintheAnnualReportoftheBoardofDirectorsonpage24.


NOTICE IS HEREBY GIVENthattheSixtyEighthAnnualGeneralMeetingof CEYLON INVESTMENT PLCwillbeheldonWednesday,the30thdayofJuly2014at9.30a.m.atHiltonColombo,“GrandBallroom”,No.2,SirChittampalamA.GardinerMawatha,Colombo2forthefollowingpurposes:

1. ToreceiveandadopttheAnnualReportoftheBoardofDirectorsandtheFinancialStatementsfortheyearended31stMarch2014,togetherwiththeIndependentAuditors’Reportthereon.

2. Tore-electMrs.M.A.R.C.CooraywhoretiresbyrotationintermsofArticles89,90and91oftheArticlesofAssociationoftheCompany.

3. Tore-electMr.A.P.WeeratungewhoretiresbyrotationintermsofArticles89,90and91oftheArticlesofAssociationoftheCompany.

4. Tore-appointMr.I.PaulrajasaDirectoroftheCompanywhoisoverSeventyyearsofageandtoconsiderandifdeemedfittopassthefollowingresolution:

“ITISHEREBYRESOLVEDthattheagelimitstipulatedinSection210oftheCompaniesActNo.07of2007shallnotbeapplicabletoMr.I.Paulrajwhois77yearsofageandthathebere-appointedaDirectoroftheCompanyfromtheconclusionoftheAnnualGeneralMeetingforafurtherperiodofoneyear”.

5. Tore-appointMr.AdeZ.GunasekeraasaDirectoroftheCompanywhoisoverSeventyyearsofageandtoconsiderandifdeemedfittopassthefollowingresolution:

“ITISHEREBYRESOLVEDthattheagelimitstipulatedinSection210oftheCompaniesActNo.07of2007shallnotbeapplicabletoMr.A.deZ.Gunasekerawhois74yearsofageandthathebere-appointedaDirectoroftheCompanyfromtheconclusionoftheAnnualGeneralMeetingforafurtherperiodofoneyear”.

6. Tore-appointMessrs.KPMG,CharteredAccountantsasAuditorsoftheCompanyassetoutinSection154(1)oftheCompaniesActNo.07of2007andtoauthorizetheDirectorstodeterminetheirremuneration.

ByOrderoftheBoard

(Sgd.)K.D. De Silva (Mrs.)DirectorCARSONS MANAGEMENT SERVICES (PRIVATE) LIMITEDSecretaries

Colombo,25thJune2014

Notes:1. Amemberisentitledtoappointaproxytoattendandvoteinsteadofhim/herself.AproxyneednotbeamemberoftheCompany.AFormofProxy

accompaniesthisNotice.

2. ThecompletedFormofProxymustbedepositedattheRegisteredOffice,No.61,JanadhipathiMawatha,Colombo1,notlaterthan9.30a.m.on28thJuly2014.

3. ApersonrepresentingaCorporationisrequiredtocarryacertifiedcopyoftheresolutionauthorizinghim/hertoactastherepresentativeoftheCorporation.Arepresentativeneednotbeamember.

4. ThetransferbooksoftheCompanywillremainopen.

5. SecurityCheck- Weshallbeobligediftheshareholders/proxiesattendingtheAnnualGeneralMeeting,producetheirNationalIdentityCardtothesecuritypersonnel

stationedattheentrancelobby.

Notice of Meeting


*I/We................................................................................................................................................................................................

of......................................................................................................................................................................................................

being*aMember/MembersofCeylonInvestmentPLCherebyappoint................................................................................................................

of.............................................................................................................................................................................................................

bearingNICNo./PassportNo.......................................................orfailinghim/her

IsraelPaulraj orfailinghim,DonChandimaRajakarunaGunawardena orfailinghim,AjithPrashanthaWeeratunge orfailinghim,MirihanaArachchigeRoseChandralathaCooray orfailingher,AsokadeZ.Gunasekera orfailinghim,VernonManilalFernando orfailinghim,KrishnaSelvanathan

as*my/ourproxytoattendatthe68thAnnualGeneralMeetingoftheCompanytobeheldonWednesday,the30thdayofJuly2014at9.30a.m.atHiltonColombo,“GrandBallroom”,No.2,SirChittampalamA.GardinerMawatha,Colombo2andatanyadjournmentthereofandateverypollwhichmaybetakeninconsequencethereof. For Against

(1)ToadopttheAnnualReportoftheBoardofDirectorsandtheFinancialStatementsfortheyearended31stMarch2014,togetherwiththeIndependentAuditors’Reportthereon.

(2)Tore-electMrs.M.A.R.C.CooraywhoretiresbyrotationintermsofArticles89,90and91oftheArticlesofAssociationoftheCompany.

(3)Tore-electMr.A.P.WeeratungewhoretiresbyrotationintermsofArticles89,90and91oftheArticlesofAssociationoftheCompany.

(4)Tore-appointMr.I.PaulrajwhoisoverSeventyyearsofageasaDirectoroftheCompany.

(5)Tore-appointMr.A.deZ.GunasekerawhoisoverSeventyyearsofageasaDirectoroftheCompany.

(6) Tore-appointMessrs.KPMG,CharteredAccountantsasAuditorsoftheCompanyassetoutinSection154(1)oftheCompaniesAct.No.07of2007andtoauthorizetheDirectorstodeterminetheirremuneration.

Signedthis...................................................dayof……………………TwoThousandandFourteen.

…………………………………. Signature/s

(a) *Pleasedeletetheinappropriatewords.(b) AshareholderentitledtoattendandvoteataGeneralMeetingoftheCompany,isentitledtoappointaproxytoattendandvoteinsteadofhim/her

andtheproxyneednotbeashareholderoftheCompany.AproxysoappointedshallhavetherighttovoteonashowofhandsoronapollandtospeakattheGeneralMeetingoftheshareholders.

(c) Ashareholderisnotentitledtoappointmorethanoneproxytoattendonthesameoccasion.(d) Instructionsarenotedonthereversehereof.

Form of Proxy


Form of Proxy

INSTRUCTIONS AS TO COMPLETION1. Kindlyperfecttheformofproxyafterfillinginlegiblyyourfullnameandaddress,bysigninginthespaceprovided.Pleasefillinthedateofsignature.

2. IfyouwishtoappointapersonotherthantheDirectorsasyourproxy,pleaseinserttherelevantdetailsinthespaceprovidedoverleaf.

3. IntermsofArticle71oftheArticlesofAssociationoftheCompany:

Theinstrumentappointingaproxyshallbeinwritingand:

(i) inthecaseofanindividualshallbesignedbytheappointororbyhisattorney;and (ii) inthecaseofacorporationshallbeeitherunderitscommonsealorsignedbyitsattorneyorbyanofficeronbehalfofthecorporation.

TheCompanymay,butshallnotbeboundto,requireevidenceoftheauthorityofanysuchattorneyorofficer.AproxyneednotbeamemberoftheCompany.

4. IntermsofArticle66oftheArticlesofAssociationoftheCompany:

Inthecaseofjoint-holdersofashare,theseniorwhotendersavote,whetherinpersonorbyproxyorbyattorneyorbyrepresentative,shallbeacceptedtotheexclusionofthevotesoftheotherjoint-holdersandforthispurposeseniorityshallbedeterminedbytheorderinwhichthenamesstandsintheRegisterofmembersinrespectofthejointholding.

5. TobevalidthecompletedformofproxyshouldbedepositedattheRegisteredOfficeoftheCompanysituatedatNo.61,JanadhipathiMawatha,Colombo1notlaterthan9.30a.m.on28thJuly2014.

Pleasefillinthefollowingdetails:

Name : …………………………………………………………………………………………………………………………………………

Address : …………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………

Jointlywith : …………………………………………………………………………………………………………………………………………

ShareFolioNo. : …………………………………………………………………………………………………………………………………………


Note


Ceylon Investment PLC - PQ 68

ADDITIONAL INFORMATION TO SHAREHOLDERS

We are herewith circulating the portfolio of the company’s associate company, Rubber Investment Trust Limited. The investment in associate company is accounted in “Equity Method” of accounting in the company’s published financial statement as required by the Sri Lanka Accounting Standard - LKAS 28 “Investments in Associates”

INVESTMENT PORTFOLIO OF RUBBER INVESTMENT TRUST LIMITED

(Amounts expressed in Sri Lankan Rupee thousands)

2014 2013 Cost Fair Value Cost Fair Value as at as at as at as at Note Note 31st March 31st March 31st March

Investment in equity accounted investees 1 1,927 12,076,963 1,927 14,419,186

Available for sale financial assets 2 454,921 2,142,615 338,099 2,776,948

Fair value through profit or loss financial assets 3 - 404,923 - 296,136

456,848 14,624,501 340,026 17,492,270

1. Investment in equity accounted investees % Cost Fair value % Cost Fair value Holding as at as at Holding as at as at 31st March 31st March 31st March 31st March 2014 2014 2013 2013

Quoted Bukit Darah PLC 20.04% 1,927 12,076,963 20.04% 1,927 14,419,186

1,927 12,076,963 1,927 14,419,186

2. Availableforsalefinancialassets 2014 2013 No. of Cost Fair value No. of Cost Fair value Shares as at as at Shares as at as at 31st March 31st March 31st March 31st March

(A) Quoted Diversified John Keells Holdings PLC 9,122,814 453,955 2,070,879 11,240,529 337,563 2,776,412

John Keells Holdings Warrants - 2015 503,706 - 34,554 - - -

John Keells Holdings Warrants - 2016 503,706 - 36,216 - - -

453,955 2,141,649 337,563 2,776,412

Total investment in available for salefinancialassets-Quoted 453,955 2,141,649 337,563 2,776,412

2 | Ceylon Investment PLC | Annual Report 2013/14

2. Availableforsalefinancialassets(contd.) 2014 2013 No. of Cost Fair value No. of Cost Fair value Shares as at as at Shares as at as at 31st March 31st March 31st March 31st March

(B) Unquoted DFCC Vardhana Bank 55,253 963 963 42,975 533 533

963 963 533 533

Total investment in available forsalefinancialassets-Unquoted 963 963 533 533

(C)Investments in Debentures Redeemable unsecured Riverina Hotels Limited 56 1 1 56 1 1

Ocean View Limited - 6% 120 1 1 120 1 1

Total Investment in Debentures 2 2 2 2

(D) Preference Shares Bukit Darah PLC - 8% 31,875 1 1 31,875 1 1

Total Investment in Preference Shares 1 1 1 1

Total investment in available forsalefinancialassets 454,921 2,142,615 338,099 2,776,948


3. Fairvaluethroughprofitorlossfinancialassets No.of Fairvalue No.of Fairvalue Shares as at Shares as at 31st March 31st March 2014 2013

Banks, Finance & Insurance Commercial Bank of Ceylon PLC 310,537 38,196 441,040 49,838

DFCC Bank PLC 113,124 16,278 - -

Hatton National Bank PLC 285,000 42,750 390,000 65,247

National Development Bank PLC 416,525 74,391 - -

Nations Trust Bank PLC 100,000 6,490 - -

People's Leasing & Finance PLC - - 180,688 2,367

178,105 117,452

Beverage, Food & Tobacco Ceylon Tobacco Company PLC 18,340 19,367 24,340 19,002

Distilleries Company of Sri Lanka PLC 121,278 24,619 393,644 65,542

43,986 84,544

Diversified Aitken Spence PLC 370,218 36,244 - -

Expolanka Holdings PLC 200,000 1,740 - -

Hemas Holdings PLC 634,488 23,920 - -

John Keells Holdings PLC 189,239 42,957 295,234 72,922

John Keells Holdings Warrants 2016 100,000 7,190 - -

112,051 72,922

Healthcare The Lanka Hospital Corporation PLC 60,000 2,496 - -

2,496 -

Hotels & Travels Aitken Spence Hotel Holdings PLC 200,577 14,040 200,577 14,843

Asian Hotels Botets & Travel Properties PLC 97,000 5,704 - -

19,744 14,843

Manufacturing Kelani Tyres PLC 179,849 9,388 - -

9,388 -

4 | Ceylon Investment PLC | Annual Report 2013/14

3 Fairvaluethroughprofitorlossfinancialassets(Contd.) No.of Fairvalue No.of Fairvalue Shares as at Shares as at 31st March 31st March 2014 2013

Power and Energy Lanka IOC PLC 600,000 23,100 - -

Laugfs Gas PLC 125,775 4,088 - -

27,188 -

Telecommunications Dialog Axiata PLC 1,329,448 11,965 750,000 6,375

11,965 6,375

Totalinvestmentinfairvaluethroughprofitorlossfinancialassets 404,923 296,136

Ceylon Investment PLC - 2013/2014

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